Newspaper article The Evening Standard (London, England)

BP Prospects Bring a Slick Opportunity; Spread Betting

Newspaper article The Evening Standard (London, England)

BP Prospects Bring a Slick Opportunity; Spread Betting

Article excerpt


IN FINANCIAL spread bookmakers' offices across the City, activity has been frenetic in recent days. Firms reported their busiest-ever week's trading last week, as clients contended with big falls in share prices in the US and Europe.

Bookies have also had to keep an even closer eye than usual on customers' exposures, and, like other derivative trading organisations across the world, have been checking their books for suspicious trades made before the 11 September terrorist attacks on the US.

Spread betting is a largely British phenomenon and heavily regulated by the Securities and Futures Authority, so would be an unlikely instrument for terrorists to use. Yet the SFA still asked for checks.

IG Index said yesterday: "Airline stocks had been very well traded for three months before the attacks, but there were hardly any open positions left by 11 September." City Index said it had checked its books but found "nothing unusual".

One of the most intriguing bets over the next few weeks is likely to be on the price of oil. On Monday, Brent crude slumped by $3.75 a barrel, its biggest one-day fall for 10 years.

Yesterday, bookie Financial Spreads was quoting a barrel of Brent for November delivery on a spread of 2251-2266 ($22.51 to $22.66).

The case for a down-bet from 2251 is that, even after Monday's big price over the next few months would slash demand and leave the market oversupplied with oil.

This argument assumes Allied military action will be confined to Afghanistan, and that members of the Organisation of Petroleum Exporting Countries will keep the oil flowing in order to stay in the good books of the US.

The case for an up-bet from 2266 is that Opec representatives, meeting today in Vienna, will be concerned about oil's fall to the bottom of their $22-$28 a barrel target range, and may decide over the next few weeks to cut output.

There is also a risk the US military might end up taking measures against Iraq, if Saddam Hussein is implicated in the 11 September attacks, putting into question Iraqi oil exports. …

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