Options could help drive crude oil to $100

LONDON (Reuters) - Activity in U.S. crude oil options has played a big part in oil's climb above $90 a barrel and could help U.S. crude break the $100 mark.

"We continue to view option hedging as one key driver to the direction of...futures," said Olivier Jakob, of oil market consultancy Petromatrix.

"We've gone through $90, now the additional momentum is going to come from the call (options) on $100," he said.

Oil is at record highs as supply concerns, a weak dollar and tensions in the Middle East have helped draw investment money into crude and other commodities.

Investors in oil can use options to bet on price direction while commercial end-users of oil such as airlines can use them to protect against sudden price spikes.

A call-option gives an investor the right to buy an underlying futures contract at a set price by a certain date, while a put-option gives the right to sell.

Heavy buying of call options on U.S. crude -- West Texas Intermediate -- has increased demand for the underlying oil futures as the sellers of the call options need to hedge their positions.

"The market participants that have sold the calls need to hedge themselves and to hedge themselves they need to buy futures," said Jakob.

Goldman Sachs has also pointed to the role played by call options in oil's latest price surge.