Oil Traders Eye Glut Yet Remain Haunted by Past Price Spikes

(Bloomberg)–Bearish oil traders scarred by past geopolitical price spikes are increasingly favoring safer ways to position for a looming glut.

With the fresh uncertainty surrounding Russian supply, traders are shifting toward spreads, the price differences between two futures contracts, and options, which grant the holder the right but not the obligation to buy or sell oil at a set price. Those relatively less risky strategies compared to wagering on outright futures allow traders to bet on lower prices en route to a widely telegraphed oversupply of crude next year.