Oil Bets Most Bullish in Two Years as Mideast Tension Flares

Oil futures posted their largest gain in more than a year last week. And the frenzy was even bigger in the options market.

As traders fretted over the risk of a major price spike, the call skew on second-month West Texas Intermediate futures jumped to the highest since March 2022, when Russia’s invasion of Ukraine sparked concerns that millions of barrels a day of oil from one of the world’s top producers would suddenly disappear from the market.

oi traders

In a stunning turnaround, hedge funds, commodity trading advisors and other money managers raced to reverse positions that in mid-September had turned bearish on crude on concern that slower economic growth in China and elsewhere would crimp demand just as OPEC+ producers were getting set to boost supply. About two weeks ago, put volume peaked, with traders paying up for bearish options as futures slumped toward $70 a barrel.