Traders pile into $80 US oil bets as tensions rise in Middle East
Call options grant the holder a right to buy futures contract at the preset price and date, and a rise in volumes can help gauge market sentiment.
About 33,411 contracts of August-2025 $80 call options for WTI crude oil were traded on Friday on a total trading volume of 681,000 contracts, marking the highest volume for these options this year, according to CME Group data.
The last time trading was this high for $80 call contracts was on January 10, with 17,030 February-2025 $80 call options traded on a total trading volume of 301,866 contracts.
Oil prices jumped on Friday and settled 7 per cent higher as Israel and Iran launched air strikes, feeding investor worries that the combat could widely disrupt oil exports from the Middle East.
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Business Times
2 days ago
- Business Times
Oil prices dip to settle at three-week low on US and China economic concerns
[NEW YORK] Oil prices eased on Friday (Jul 25) and settled at a three-week low as traders worried about negative economic news from the US and China and signs of growing supply. Losses were limited by optimism US trade deals could boost global economic growth and oil demand in the future. Brent crude futures fell 74 US cents, or 1.1 per cent, to settle at US$68.44, while US West Texas Intermediate (WTI) crude fell 87 US cents, or 1.3 per cent, to settle at US$65.16. Those were the lowest settlement levels for Brent since Jul 4 and WTI since Jun 30. For the week, Brent was down about 1 per cent with WTI down about 3 per cent. European Commission President Ursula von der Leyen will meet US President Donald Trump on Sunday in Scotland. European Union officials and diplomats said they expected to reach a framework trade deal this weekend. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The euro zone economy has remained resilient to the pervasive uncertainty caused by a global trade war, a slew of data showed on Friday, even as European Central Bank policymakers appeared to temper market bets on no more rate cuts. In the US, new orders for US-manufactured capital goods unexpectedly fell in June while shipments of those products increased moderately, suggesting business spending on equipment slowed considerably in the second quarter. Trump said he had a good meeting with Federal Reserve chair Jerome Powell and got the impression that the head of the US central bank might be ready to lower interest rates. Lower interest rates reduce consumer borrowing costs and can boost economic growth and demand for oil. In China, the world's second-biggest economy, fiscal revenue dipped 0.3 per cent in the first six months from a year earlier, the finance ministry said, maintaining the rate of decline seen between January and May. Growing supplies? The US is preparing to allow partners of Venezuela's state-run PDVSA, starting with US oil major Chevron, to operate with limitations in the sanctioned nation, sources said on Thursday. That could boost Venezuelan oil exports by a little more than 200,000 barrels per day (bpd), news US refiners would welcome, as it would ease tightness in the heavier crude market, ING analysts wrote. Iran said it would continue nuclear talks with European powers after 'serious, frank, and detailed' conversations on Friday, the first such face-to-face meeting since Israel and the US bombed Iran last month. Venezuela and Iran are members of the Organization of the Petroleum Exporting Countries (Opec). Any deal that could increase the amount of oil either sanctioned country could export would boost the amount of crude available to global markets. OPEC said the joint ministerial monitoring committee (JMMC) scheduled to convene on Monday does not hold decision-making authority over production levels. Four Opec+ delegates said an Opec+ panel is unlikely to alter existing plans to raise oil output when it meets, noting the producer group is keen to recover market share while summer demand is helping to absorb the extra barrels. Opec+ includes Opec and allies like Russia. In Russia, the world's No 2 crude producer behind the US, daily oil exports from its western ports are set to be around 1.8 million bpd in August, down from 1.9 million bpd in July's plan, Reuters calculations based on data from two sources show. In the US, energy firms this week cut the number of oil and natural gas rigs operating for the 12th time in 13 weeks, energy services firm Baker Hughes said in its closely followed report on Friday. REUTERS
Business Times
2 days ago
- Business Times
Is gold still shining?
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But since the April peak, gold has been trading mostly sideways within a wide and volatile range of US$3,200 to US$3,400 per ounce, losing a bit of momentum as of late. The metal appears to be supported in the medium term, given trade policy and economic uncertainty, the impact of tariffs on the US and world economies, and continuing central bank purchases. However, with the absence of a major geopolitical event that would typically drive investor demand higher, as well as slowing jewellery and coin purchases, we believe the strong upward momentum appears to have run its course. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up What drove gold's decline from its April 2025 peak of about US$3,500? In April, US-China tensions escalated sharply and as a result, tariffs were significantly increased on both sides of the Pacific. We saw increased volatility in the markets, a condition in which gold typically thrives. Investor demand increased substantially as a result. But since then, conditions have begun to improve. The May 12 joint statement regarding a tariff truce between the United States and China signalled progress, and tariffs have moderated. Meanwhile, cross-border hostilities between Iran and Israel seem to have eased with those countries' mutually agreed upon truce, at least in the short term. At the same time, we believe there are signs of softening jewellery and coin demand, largely due to high prices and volatility. In India, which is a key market for gold, consumer purchases seemed to be a bit slow during key festive events. While the total value of purchases remains high, this seems driven more by elevated prices than by quantity. Is this a temporary correction or a trend reversal? Despite heightened regional instability due to the Iran-Israel conflict, gold prices have failed to surpass their April highs. We believe central bank gold purchases gold buying was lower in the first quarter of 2025, both sequentially and on a year-over-year basis, suggesting that even though dollar diversification as a trend is likely to continue, high gold prices might disincentivise part of the demand from central banks. Investor positioning in exchange-traded funds (ETFs) have increased sharply this year, but the trend is not mirrored in futures. While there are enough catalysts to support gold prices at current levels, a sustaining rally from here might prove more challenging. Is gold headed to US$4,000 – or falling back to US$2,800? We see a wide range in gold price forecasts, from bullish US$4,000 targets to bearish calls near US$2,400 for 2026, which reflects underlying market uncertainty. To better understand momentum, we believe demand should be viewed across three segments: central banks, institutional investors, and physical demand for coin and jewellery. Since 2022, central banks have structurally increased gold holdings to help diversify away from the US dollar; many emerging market (EM) central banks still have room to expand allocations to gold. In contrast, elevated prices have begun to curb physical demand in gold. Investor demand has been very strong so far this year amid economic and geopolitical risks due to gold's perception as a safe haven. In our view, a strong upward momentum in gold from current levels would require investors to further increase their allocations – something we believe may be challenging. And, as always in periods of high commodity prices, supply and recycling are incentivised, which could limit the rally's upside potential. What would need to happen for gold to surpass its recent peak? A combination of weaker growth because of tariffs and an uptick in inflation could put the US Federal Reserve in wait-and-see mode, making the US dollar less attractive. This could be in favour of gold prices, as we believe gold remains a reliable hedge against uncertainty, recession, and stagflation risks. In addition, meaningful escalation in geopolitical conflicts or trade wars could be positive catalysts for a gold rally. We believe central bank gold purchases are also likely to continue, driven by dollar diversification due to persistent deficits and policy uncertainty in the United States. What would need to happen for gold to pull back even further? We're seeing signs that investors are trimming their gold exposure. Futures positioning has come down, and ETF holdings have started to taper off. If sentiment continues to improve and tariffs end up being less damaging to growth, we believe investors may rotate back into risk assets, which could weigh on gold prices. We've also seen signs of weaker physical demand in key markets, such as India, as retail investors and consumers delay or reduce purchases on the back of high prices and volatility. Given market volatility, how reliable are gold price forecasts? So far in 2025, gold price forecasts have been revised four to five times in most major forecasting institutions, which is far more frequently than the usual quarterly or semiannual updates. This underscores how volatile and unpredictable the current environment is, making it especially difficult to rely solely on forecasts for investment decisions. Instead, we focus on fundamentals such as quarterly central bank purchases, gold reserves in central bank balance sheets, futures and ETF positioning, and gold's correlation with the US dollar. We also closely track economic and trade news to gauge sentiment and momentum. What should EM debt investors consider now? About 80 per cent of mined gold comes from EM countries, providing plenty of investment opportunities for investors in EMs. Our approach to investing in gold companies in EMs involves thorough research analysis on the company's operations and financials as well as the gold market as a whole. We also stress test gold miners' resilience across different price scenarios, focusing on companies that invest in reserve growth and expansion while managing downside risks. We believe the current environment presents good hedging opportunities for disciplined producers. The writer is senior corporate credit and sustainability analyst on William Blair's emerging markets debt team
Straits Times
2 days ago
- Straits Times
Iran says it held ‘frank' nuclear talks with European powers
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Iranian diplomats have previously warned that Tehran could withdraw from the global nuclear non-proliferation treaty if sanctions were reimposed. Israeli Foreign Minister Gideon Saar has urged European powers to trigger the mechanism. Israel's June 13 attack on Iran came two days before Tehran and Washington were scheduled to meet for a sixth round of nuclear negotiations. On June 22, the US joined Israel's offensive by striking Iranian nuclear facilities at Fordo, Isfahan, and Natanz. Before the war, the US and Iran were divided over uranium enrichment – with Tehran describing it as a 'non-negotiable' right, while Washington called it a 'red line'. The International Atomic Energy Agency (IAEA) says Iran is enriching uranium to 60 per cent purity – far above the 3.67 per cent cap under the 2015 deal and close to weapons-grade levels. Tehran has said it is open to discussing the rate and level of enrichment, but not the right to enrich uranium. A year after the US withdrew from the nuclear deal, Iran began rolling back its commitments, which had placed restrictions on its nuclear activities in exchange for sanctions relief. Israel and Western powers accuse Iran of pursuing nuclear weapons, a charge Tehran has repeatedly denied. 'New form' Iran insists it will not abandon its nuclear programme, with Foreign Minister Abbas Araghchi describing the position as 'unshakable'. Though he claimed enrichment had come to a halt because of 'serious and severe' damage to nuclear sites caused by US and Israeli strikes, the full extent of the damage sustained in the US bombing remains unclear. Mr Trump claimed at the time the sites had been 'completely destroyed', but US media reports based on Pentagon assessments cast doubt on the scale of destruction . Since the 12-day war, Iran has suspended cooperation with the IAEA, accusing it of bias and failing to condemn the attacks. Inspectors have since left the country but a technical team is expected to return in the coming weeks after Iran said future cooperation would take a 'new form'. Israel has warned it may resume strikes if Iran rebuilds facilities or moves toward weapons capability. Iran has pledged a 'harsh response' to any future attacks. AFP
