By Henning Gloystein and Gavin Maguire
SINGAPORE (Reuters) - Oil traders have shifted to hold a more bearish outlook on crude prices this year and into 2016, with data showing the number of sell options taken out at $40, $35, $30 and even $25 a barrel has jumped in the past four weeks.
Benchmark U.S. crude futures were trading at $41.50 per barrel on Friday, not far off 2015 lows and more than 15 percent below levels reached after a rally starting in August had stirred market expectations that a price rout starting in June 2014 may be ending.
Now, Reuters data shows that open interest in put options in U.S. crude futures - which shows the number of unsettled deals betting on lower prices - has soared over the past four weeks.
"The trend is your friend, and the trend is down. It looks very bearish," said Oystein Berentsen, managing director of crude oil at Singapore-based Strong Petrochemical.
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"We've seen more producers selling, even at these low prices," he added.
The number of options taken to sell U.S. crude if prices fall to $40 by January has surged from under 1,000 in August to more than 18,000, Reuters data shows, and the number of contracts to sell if crude falls to $35 a barrel by December has jumped from under 10,000 in mid-October to almost 25,000, with more than 13,000 options taken out to sell U.S. crude at $25 a barrel this December.
Traders also seem to be positioning for cheap oil well into next year, with the number of options to sell at $30 a barrel in March 2016 jumping from virtually zero before August to almost 12,000.
Similar positions are being taken in internationally traded Brent futures, with the volumes of options to sell at $40, $35, $30 and even $25 per barrel if prices fall to those levels between December this year and June 2016 all soaring over the last month. Front-month Brent crude is currently trading at around $44 per barrel.
"A year end recovery in commodity prices remains unlikely with a stronger US$ and EM (emerging market) growth concerns," ANZ bank said, referring to a surge of the greenback versus most other currencies on the expectation that the U.S. Federal Reserve will raise interest rates soon.
A stronger dollar makes oil, in which it is traded, more expensive for importers using other currencies domestically, acting as a drag on crude pries.
Weakness in Asia's two biggest economies, China and Japan, is also weighing on prices.
(Editing by Ed Davies)
