US oilman Boone Pickens said today he thinks oil prices will be above US$100 per barrel at some stage during 2010 and US$300 within 10 years.
Pickens isn't alone in his bullish outlook. Quite a few December 2015 NYMEX WTI crude oil US$500 strike call options have been purchased since the beginning of October this year (see chart below).
So someone out there thinks the probability of crude trading above US$500 per barrel by December 2015 is worth consideration at a value around US$1 per barrel. That’s a big premium for a big oil number.
The oil market is placing a higher probability than other asset markets on the chance of outsized inflation.
For more on oil options check out Chapter 19 of Oil 101.