alt Hacker NewsThere are other possibilities.
- This is a situation they’ve never faced before. It’s hard to simulate and betting on high prices may not be a great bet. Especially given that oil futures aren’t like buying options. You actually have to take delivery.
- They’re expecting a recession.
- They don’t want to invest the money In aggregate that they’d have to in futures to raise the price above certain levels.
- They suspect a lot of oil consumers will simply shut shop and end demand since those prices won’t be sustainable for many businesses. Airlines are already canceling flights.
- They expect the blockades to end sooner rather than later.
Replies
Options on crude oil futures settle in the underlying (futures), which settle in the underlying (oil) at expiry of the futures contract. Futures positions can be closed without giving or taking delivery.
You give some interesting ideas to think about, however if we predict everyone shuts up shop in the future, then I don’t see near price of oil going to 150.
There is another possibility: "they" are interested parties working to keep futures down as long as possible. When the space shuttle Columbia re-entered with a massive hole in its wing, the control systems kept it stable for quite awhile, until finally the vehicle went so far out of the control band that it could no longer compensate and it disintegrated. We may be seeing the same thing happen on a much larger system that is experiencing conditions outside of its operating history.