$200 a Barrel in 2008?

The New Year may be only days old, but Bloomberg reports that the “fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.”

Options to buy oil for $200 on the New York Mercantile Exchange have apparently risen 10-fold in the past two months, with some traders expecting oil to rise for a seventh straight year.

Other analysts agree. “One hundred dollars a barrel is actually 14.9 cents a cup, so we’re still talking about oil being remarkably cheap,” argues Matthew R. Simmons, chairman of Simmons & Co. International. Inventories “are tight as a drum and I don’t see how we get out of this box,” he said in a Bloomberg television interview last week. “Demand clearly isn’t starting to slow down.”

“We haven’t got to $100 on just a whim,” said Paul Horsnell, head of commodities research at Barclays Capital in London. “This is at heart also about longer-term concerns that supply capacity investment needs higher prices to keep up with demand growth.”

Taking bets anyone?