Wednesday’s $5 surge in the price of oil was the largest one-day increase ever for crude, according to Reuters EcoWin data, and it stands as just the latest example of the big price swings that have gripped the energy complex since oil overtook the $100 a barrel mark.
At its peak Wednesday, when the front-month Nymex contract traded at $104.95, the gain on the day briefly was $5.43 — also the biggest move ever to an intraday high from the previous day’s closing level.
But look at a more telling gauge of oil market volatility — daily percentage move, which provides the magnitude of a price move relative to current market levels. A close read on that data suggests the market today is actually far more calm than it was one decade ago — or even two — when crude was trading below $20 a barrel, more than 80 percent cheaper than today.
On average over the past 20 days, oil has swung from the previous day’s close in a range from up 1.9 percent to down 1.2 percent. A longer horizon, looking back over the past 50 trading days, shows the range to have been from up 1.5 percent to down 1.4 percent.
But rewind about 10 years to mid-1998 and you’ll find that the 20-day average daily range was from up about 3.7 percent to down 2.7 percent, and the 50-day moving average percentage swing was from up 2.6 percent to down 2.1 percent. Of course, the price then? Less than $14 a barrel.
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3 comments so far
As a simple businessman am I missing the point here? The average house price wasn’t up by anywhere near 700% on 1998, even at their peak. Thanks to China and India the consumption of oil has risen in those ten years for sure but again not by anything like 700%. At $111 a barrel the last time I checked, it doesn’t follow that at that price it can still be regarded as a long term triple A rated investment. After all they said that about mortgages didn’t they?
- Posted by Joe JonklerUnfortunately, buying oil today is kind of like buying a ticket to a sold out concert. It has all been purchased, so we are subject to the whim of the resellers. Unless we can somehow generate a surplus things will stay that way.
- Posted by Harry AndertonAll this Oil bull run is simply a bubble waiting to burst. When you talk of India China demand, the state run oil companies are incurring heavy losses due to subsidised fuel. Once the Govt. decides to raise fule price, all analysts will be talking a different tune. Oil was good buy when it was 50$, but now at 118-120. Dont these Investment advisers know that it has already run its course. Now to talk of 200$ after it has reached 100$ surely shows that you people are talking greedy. Greed always kill. Thats what happened to your Housing market. Everytime we hear a blast or supply disruption whenever its comig down and suddenly the picture changes. I am sure Oil companies have something to do with this disruptions, as they benefit the most out of these spikes in oil prices and their stock prices. Point is no one sees that. Only word is beware. People have always loose money when ever they pursue things at such abnormal heights.
- Posted by Rishab Singh Solanki