Markets ponder $200 oil this year

January 7, 2008
Traders are running up the price of oil on the New York Mercantile Exchange despite some analysts' predictions that oil will fall as the economy slows.

In the past two months, $200 options have increased 10-fold, to 5,533 contracts, according to Bloomberg. That's the fastest-growing bet on oil.

Matthew Simmons, chairman of an energy-focused investment bank in Houston called Simmons & Co. International, said demand won't slow, supply will remain tight, and at the current price of nearly $100 at barrel is still "remarkably cheap."

Saudi Arabia wasn't able to launch production in its Khursaniyah oil field last month as it had hoped. A large oil find in Brazil will require five years to bring on line and Nigeria fighting is retarding production.

However, even with those and other production woes, 27 analysts surveyed by Bloomberg predicted prices will average $78 a barrel in 2008.

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