A single trader has placed a substantial bet that Brent crude oil prices will plummet below $US50 a barrel by the end of the year. This wager anticipates that increasing global oil supply will outweigh geopolitical risks emanating from regions like Ukraine and the Middle East. Put options equivalent to 10 million barrels of Brent crude were traded on Monday, signalling a strong conviction in the price decline. The buyer of the $US50/$49 put spread stands to profit handsomely if February futures fall approximately 25 per cent from their current level of around $68 a barrel by the December 23 options expiration. After the initial trades, several additional funds were reportedly considering similar positions on Tuesday, according to a broker.
The wager aligns with a growing sentiment among some leading energy forecasters that the oil market will experience an oversupply situation by year’s end. Analysts at Macquarie Group, including Vikas Dwivedi, noted that global supply growth from both OPEC and non-OPEC producers is expected to contribute to a surplus of roughly 3 million barrels per day in the fourth quarter of this year and the first quarter of 2026. Benchmark crude futures have largely remained within a narrow trading range of less than $US5 since August.
Despite this bearish outlook, crude futures have shown some resilience in recent days, buoyed by Ukraine’s intensified attacks on Russian energy infrastructure. The potential for reduced oil flows from Moscow has triggered a rally in futures prices. This shift has led to a slightly more optimistic market sentiment, with call options fetching a higher premium than put options for the first time since July. The initial wager on Monday, costing approximately $US350,000, could potentially yield a profit of up to $US10 million if prices reach $US49.
