• 3 minutes Boris Johnson taken decision about 5G Huawei ban by delay (fait accompli method)
  • 6 minutes This Battery Uses Up CO2 to Create Energy
  • 10 minutes Phase One trade deal, for China it is all about technology war
  • 12 minutes Trump has changed into a World Leader
  • 2 mins Indonesia Stands Up to China. Will Japan Help?
  • 11 hours Might be Time for NG Producers to Find New Career
  • 2 mins Angela Merkel take notice. Russia cut off Belarus oil supply because they would not do as Russia demanded
  • 18 hours Shale Oil Fiasco
  • 2 hours Environmentalists demand oil and gas companies *IN THE USA AND CANADA* reduce emissions to address climate change
  • 34 mins We're freezing! Isn't it great? The carbon tax must be working!
  • 2 hours Beijing Must Face Reality That Taiwan is Independent
  • 1 hour China's Economy and Subsequent Energy Demand To Decelerate Sharply Through 2024
  • 18 hours US Shale: Technology
  • 2 days Swedes Think Climate Policy Worst Waste of Taxpayers' Money in 2019
  • 2 days Denmark gets 47% of its electricity from wind in 2019
  • 2 days Wind Turbine Blades Not Recyclable
Alt Text

Asian Oil Buyers Unfazed By Iran Crisis

Oil prices rose and fell…

Alt Text

Goldman Sachs: This Oil Rally Won’t Last

Investment bank Goldman Sachs thinks…

Alt Text

Oil Poised For Steepest Weekly Decline Since July

Oil prices were heading for…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

Oil Price Volatility Off The Charts

Oil prices and the broader financial markets have suffered from acute bout of volatility so far in 2016, with no signs of letting up.

The CBOE Crude Oil Volatility Index, a fund that tracks (as it name suggests) the volatility of crude oil, has spiked to a level not seen since the global financial meltdown in March 2009. While energy analysts have closely watched the crash of oil prices since mid-2014, only in the past two months – largely since OPEC’s December meeting – has crude oil volatility surged to its highest level in seven years.

(Click to enlarge) Related: Is Venezuela Trying To Hide Oil Assets With This Bizarre Move?

Oil prices are at their lowest levels in more than a decade, but the daily up and down moves are leaving investors with whip lash. After crashing last week following bearish comments from the Federal Reserve, oil prices surged by more than 12 percent on Friday, the largest percentage gain in seven years, on more credible news that OPEC might be coming around to the idea of coordinated production cuts. What’s more, even after the 12.3 percent gain, crude oil still ended the week lower than it was on Monday.

What explains the volatility? Part of it is due to computerized trading that leads to feedback loops of buying and selling as large volumes of capital get moved around. But computerized trading is not a new phenomenon.

Related: Shell Announces Successful Completion Of BG Merger

What is new is the instability in the financial markets. After nearly a decade of near zero interest rates from the U.S. Fed, the global economy still looks rather unsteady. There is no shortage of factors influencing oil prices today. Just to name a few: China’s growth is slowing; emerging market currencies have crashed; oil supply continues to exceed demand; oil in storage is at record levels; and Fed rate hikes may or may not be forthcoming.

This all adds up to a period of incredible volatility. That outlook probably won’t change over the course of 2016.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage




Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play