Tags: oil | gasoline | options | crude

Oil Spikes on Options Expiry, Tight US Gasoline Stocks

Thursday, 16 Oct 2014 01:58 PM

Oil prices spiked abruptly at midday on Thursday, extending an early bounce from new four-year lows as a combination of technical buying and options expiry for U.S. crude triggered a sudden frenzy of buying.

Markets had gained earlier in the day, led by a pick-up in gasoline futures after data showed U.S. stockpiles fell to their lowest level in two years, and as some traders bet that a more than 25 percent slump since June had been overdone.

At around 1 p.m. Eastern time, the market suddenly surged by as much as $3 a barrel, a move traders said was fueled by investors covering positions tied to U.S. WTI options trades, which expire later in the day, as well as automatic buy-stops.

By 1:18 p.m. EDT, oil prices had given up about half of the midday gains, but December Brent crude was up $2.18, or 2.6 percent, to $86.30 a barrel, putting it on track for the biggest one-day gain since the market began a lengthy slide in mid-June. Expiring November Brent rose 47 cents to $84.25 a barrel.

U.S. November crude rose $1.37 to $83.15 a barrel, off the intra-day high of $84.83 a barrel.

The rally appeared partly to be a reaction to the steepening sell-off over the past week or two, fueled by a growing realization that Saudi Arabia and other OPEC members are in no hurry to cut production and shore up prices.

"The market is trying to find a bottom around $80, but there's a lot of support and short covering," said Andrew Lipow, president of Lipow Oil Associates.

U.S. oil data earlier on Thursday set off a rally in New York gasoline futures, which rose more than 3 percent.

U.S. gasoline stocks fell by 3.99 million barrels from the prior week to reach 205.6 million barrels, their lowest level since November 2012, according to weekly data from the U.S. Energy Information Administration released on Thursday.

The data also showed U.S. crude inventories rose 8.9 million barrels, far higher than analysts' expectations for a build of 2.8 million barrels.

© 2017 Thomson/Reuters. All rights reserved.

 
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Oil prices spiked abruptly at midday on Thursday, extending an early bounce from new four-year lows as a combination of technical buying and options expiry for U.S. crude triggered a sudden frenzy of buying.
oil, gasoline, options, crude
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2014-58-16
Thursday, 16 Oct 2014 01:58 PM
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