Wednesday, February 22, 2017

The Quiet Price of Oil

Much has been said about the drop in volatility that we’ve seen in the stock market lately, but we’ve also seen a big drop in volatility for oil prices. Over the last 50 trading days, oil has averaged an absolute daily change of  pus or minus 1.2 percent. 

That’s significantly lower than where things stood last year at this time.  During oil’s big price collapse from late 2014 through early 2016, volatility spiked significantly.  In early 2016 when prices were about to bottom, oil had averaged a daily move of nearly  plus or minus 4 percent over the prior couple of months.

While the current reading is down sharply compared to a year ago, it’s still not close to the lows seen just prior to the peak for oil prices in late 2014.  Back then oil was seeing daily moves of just over half a percent.

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