Traders swing back to petrol above $4.02 after a one-day scare

The contract recovered to 76% after dipping to 58%, with the ladder centred near $4.04.

In one line: AAA's national average for regular petrol finishes above $4.02 on 9 November, a two-cent cushion the 76% price undervalues.

Traders have swung back towards a national petrol price above $4.02. The Kalshi contract on whether AAA's average for regular will be above $4.02 on 9 Nov stood at 93% on 2 Nov and fell to 58% on 3 Nov. It then rose 18 points in the last 24 hours to 76%. Over the seven days it is still down 17 points.

The rest of the ladder shows where traders think the average will land. They put 87% on a finish above $4.00, 49% above $4.04 and 26% above $4.06. Above $4.10 the odds drop to 5%, and the $4.12 and $4.14 strikes each sit at 2%. With $4.04 at 49%, traders put the most probable finish between $4.02 and $4.06.

The swings are large for a contract that settles on a slow average. A fall to 58% in one day and an 18-point rebound the next show traders unsure which side of the line the final reading will fall. A national figure drawn from thousands of stations tends to drift a cent at a time, so a two-cent cushion with five days left is wider than 76% allows. The ladder's midpoint sits near $4.04, two cents above the line.

The call is that AAA's average for regular will be above $4.02 on 9 Nov, and that 76% underrates it. The other side's best case is the week's direction: the contract began at 93% and has not got back there, and a steady slide would carry the average through the line by Monday. AAA's reading on 9 Nov at or below $4.02 would prove the call wrong.