Extreme Oil Bears Bet on $25, $20 and Even $15 a Barrel in 2016

Oil speculators are buying options contracts that will only pay out if crude drops to as low as $15 a barrel next year, the latest sign some investors expect an even deeper slump in energy prices. 

The bearish wagers come as OPEC’s effective scrapping of output limits, Iran’s anticipated return to the market and the resilience of production from countries such as Russia raise the prospect of a prolonged global oil glut. 

The number of outstanding contracts -- or open interest -- below $30 a barrel is relatively small. But the open interest for June 2016 put options at $25 a barrel has nearly doubled over the last week. 

Investors have even bought put options that will pay if WTI drops below $15 a barrel by December next year. The volume of financial bets at that level is tiny -- 640,000 barrels in total.

DYI Comments:  A. Gary Shilling reiterated that he believes that oil has the very real possibility of trading at $20 or less.  As the writer of this blog I realize there are massive geopolitical forces at work driving the price of oil south.  Saudi Arabia is wanting to gain market share from OPEC and non OPEC countries and with the encouragement from our State Department in an attempt to bankrupt Russia. Thereby having a possibility of Russia's eastern(east of the Urals) political subdivision into new countries that are pro U.S./U.K./NATO/EU seeking technological assistance in developing their natural resources.

If oil goes this low(I have no idea if it will) then lump summing into Adams Natural Resource Fund symbol PEO would be prudent as the possibility of lower prices would be marginal.

DYI