Biggest Oil Swings in 2 Years Accompany Rout

2015-01-08

The biggest daily price swings in two years have accompanied oil’s collapse to the lowest level since 2009 as steep losses drive up volatility and make trading riskier.

The CHART OF THE DAY shows the 30-day moving average of the daily trading range reached the highest since 2012 yesterday as West Texas Intermediate crude, shown in the lower panel, declined to the lowest in more than five years. Big swings also marked the price slumps in 2011 and 2012.

“When you have a situation where oil falls sharply in a short period of time, the daily range is a reflection of the magnitude of the drop and increased volatility,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The market tries to decide where to go next.”

WTI, the U.S. crude benchmark, tumbled 46 percent in 2014 as soaring output and a slowdown in global demand growth created a glut. Prices dropped 4.2 percent yesterday to $47.93 on the New York Mercantile Exchange.

The CBOE Crude Oil Volatility Index, which measures oil price fluctuations using options of the U.S. Oil Fund, climbed to 57.67 on Jan. 5, the highest level since October 2011.

Source from : Bloomberg

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