HardAssetsInvestor

Written by Brad Zigler  |

December 09, 2008

Today's Grab Bag: Cheap(er) Oil And Silver Options

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A couple of quick items for your consideration this morning.

Merry New Year from the EIA

The U.S. Energy Information Administration (EIA) has issued its monthly short-term forecasts for oil prices. In the words of this little corner of sunshine in the Department of Energy:

The EIA has set an average price forecast for West Texas Intermediate (WTI) crude oil at $100 per barrel. That's the average for all of 2008. Keep in mind that, year-to-date, WTI has traded at an average barrel price of about $104. Now, we've only got 15 trading days left in 2008. To bring the current average price down $4 in that time, the sell-off pace has to quicken some.

In essence, the EIA - if you put any faith in its forecasts - is telling you to short oil. And this while the quarterly NYMEX oil contango has ballooned to a record $7.21 a barrel (need background on contango? See "Oil Demand Perking Or Peaking?").

NYMEX Crude Oil Quarterly Contango 

Back in November, the EIA eyed a $112 average price for 2008. Do I need to tell you that they missed the mark on that one?

Looking ahead, the EIA thinks WTI crude will average $51 a barrel in 2009.

Never let it be said that your stingy government didn't give you something for the holidays.

And now, ladies and gentlemen, SLV options

Frustrated that you haven't been able to play your favorite option trades in the silver market? Be vexed no longer. The Chicago Board Options Exchange (CBOE) has come to your rescue. Yesterday, CBOE launched option trading on two metals grantor trusts, the iShares COMEX Gold Trust (NYSE Arca: IAU) and the iShares Silver Trust (NYSE Arca: SLV). Both trusts hold physical metals.

This is both a first and a "two-fer" for the options bourse. Back in June, CBOE inaugurated trading in the SPDR Gold Shares Trust (NYSE Arca: GLD); options on a silver grantor trust haven't been traded on an organized exchange before.

The American-style options will trade on the January expiration cycle, initially with contracts maturing in December, January, April and July.