Investors have signaled interest in a resurgent oil price, with the market for options for December 2018 at US$100, having tripled in the last week.
The forward-looking oil options market had more than 30,000 lots traded on the Intercontinental Exchange, or ICE. The activity indicates that investors consider a return to US$100 for crude within the next 18 months to be a possibility. If such an uptick in price, from the current range of US$50-US$60 materializes, it may signal a positive outlook for the breakbulk sector.
The downturn in prices has impacted a raft of oil projects over the last three years, as breakeven has been pushed ever further out. This in turn has resulted in cancellation of breakbulk contracts for operators serving the offshore oil and gas sector.
“We are extremely confident the oil space will be a good place for investors to be over the next three to five years,” said Richard Robinson, of Ashburton Investments. “Historically, a poor period featuring a lack of spending, as we have witnessed over the past five to eight years, has been followed by an equally long period of outperformance.”
ICE facilitates the electronic purchase and sale of energy commodities. It operates as an electronic exchange and links to individuals and companies looking to trade in oil, natural gas, jet fuel, emissions, electric power, commodity derivatives and futures.
Photo: Oil platform. Credit: Wikimedia