Crude oil futures settled lower on Friday, pulled down by the weight of expiring options, but managed to halve earlier losses of more than a dollar.
"Rising oil supply, the internal dynamics of the market and the expiration of options today brought prices lower," Conrad Goerl, a trader for hedge fund MotherRock LP in New York, told Dow Jones Newswires.
While some market participants will dismiss Friday's losses because of the negative effect of expiring options, Goerl said he expected rising oil supplies to continue to put a lid on prices.
Benchmark light, sweet crude futures for May settled down US$0.64 at US$50.49 a barrel on the New York Mercantile Exchange. The contract fell as much as US$1.13 during trade to a low of US$50, but met with strong support at that level.
London's International Petroleum Exchange Brent blend crude futures for June, which moved into the front-month spot on Friday, fell US$0.68 to settle at US$51.61 barrel.
Friday's losses stemmed from the expiry of an unusually large number of put options on May crude futures with a strike price of US$50. A put option gives purchasers the right, but not the obligation, to sell a fixed amount of a given asset at a specific price within a certain time period.
When options on oil futures expire, the price of crude tends to gravitate toward the most popular strike price.
Holders of about 15,000 put options on May crude futures were looking to exercise those options Friday, weighing the marker down, traders said.
Since touching a record high of US$58.28 a barrel April 4, oil futures have lost more than 13 percent of their value, falling for eight of the last 10 sessions.
Although US$50 served as the price floor for oil futures on Friday, Goerl estimated the bottom of market could be as low as US$45 a barrel.
In the near term, though, the strength of that US$50 floor may determine whether oil prices will rise or keep falling, said Jes Black, hedge fund manager for Black Flag Capital Partners LLC in Hoboken, New Jersey.
"Fifty dollars is most definitely a line in the sand, because it's a key psychological indicator and around the January high," he said.
"To give investors confidence that oil prices could go to US$60, the US$50 level needs to hold," Black said.
Nymex gasoline futures for May settled down US$0.0203 at US$1.4838 a gallon, while heating oil futures for the same month settled down US$0.0224 at US$1.4599 a gallon.
CHIP RACE: Three years of overbroad export controls drove foreign competitors to pursue their own AI chips, and ‘cost US taxpayers billions of dollars,’ Nvidia said China has figured out the US strategy for allowing it to buy Nvidia Corp’s H200s and is rejecting the artificial intelligence (AI) chip in favor of domestically developed semiconductors, White House AI adviser David Sacks said, citing news reports. US President Donald Trump on Monday said that he would allow shipments of Nvidia’s H200 chips to China, part of an administration effort backed by Sacks to challenge Chinese tech champions such as Huawei Technologies Co (華為) by bringing US competition to their home market. On Friday, Sacks signaled that he was uncertain about whether that approach would work. “They’re rejecting our chips,” Sacks
NATIONAL SECURITY: Intel’s testing of ACM tools despite US government control ‘highlights egregious gaps in US technology protection policies,’ a former official said Chipmaker Intel Corp has tested chipmaking tools this year from a toolmaker with deep roots in China and two overseas units that were targeted by US sanctions, according to two sources with direct knowledge of the matter. Intel, which fended off calls for its CEO’s resignation from US President Donald Trump in August over his alleged ties to China, got the tools from ACM Research Inc, a Fremont, California-based producer of chipmaking equipment. Two of ACM’s units, based in Shanghai and South Korea, were among a number of firms barred last year from receiving US technology over claims they have
BARRIERS: Gudeng’s chairman said it was unlikely that the US could replicate Taiwan’s science parks in Arizona, given its strict immigration policies and cultural differences Gudeng Precision Industrial Co (家登), which supplies wafer pods to the world’s major semiconductor firms, yesterday said it is in no rush to set up production in the US due to high costs. The company supplies its customers through a warehouse in Arizona jointly operated by TSS Holdings Ltd (德鑫控股), a joint holding of Gudeng and 17 Taiwanese firms in the semiconductor supply chain, including specialty plastic compounds producer Nytex Composites Co (耐特) and automated material handling system supplier Symtek Automation Asia Co (迅得). While the company has long been exploring the feasibility of setting up production in the US to address
OPTION: Uber said it could provide higher pay for batch trips, if incentives for batching is not removed entirely, as the latter would force it to pass on the costs to consumers Uber Technologies Inc yesterday warned that proposed restrictions on batching orders and minimum wages could prompt a NT$20 delivery fee increase in Taiwan, as lower efficiency would drive up costs. Uber CEO Dara Khosrowshahi made the remarks yesterday during his visit to Taiwan. He is on a multileg trip to the region, which includes stops in South Korea and Japan. His visit coincided the release last month of the Ministry of Labor’s draft bill on the delivery sector, which aims to safeguard delivery workers’ rights and improve their welfare. The ministry set the minimum pay for local food delivery drivers at
RSS