A slew of all-but-forgotten niche option positions betting on an oil glut are coming back into play as crude futures slump following a peace deal between the US and Iran.
Before the US attacked Iran, some traders had bet that a surplus of crude oil would pull near-term prices below later futures, a market structure known as contango. After the attack, however, prompt prices soared on concern about supply shortages. In late April, August West Texas Intermediate crude futures briefly surged above $5 a barrel over the September contract, which in turn was $4 above October.
