High volatility of oil prices, uncertain levels of demand, supply and fuel reserves, began to decline. Prices compared to the first quarter of 2016 increased as concerns about economic growth has abated, and growth stocks in the storage tanks has slowed compared to the beginning of the year, according to the energy information Administration of U.S. Department of energy (EIA).
EIA concludes that the volatility of the price of oil passed its peak in March of this year. The volatility in March was the highest since the beginning of 2009. Then oil prices fell against the background of financial crisis and reduced demand for petroleum products, EIA said. In January of this year, the difference between the minimum and maximum price of Brent crude reached $10 (33%) — such a situation was not observed in any month of last year, now the difference between the maximum and minimum prices had fallen to 13%, notes the EIA. Maximum volatility was recorded on March 4, it was 45%. It is calculated as standard deviation of daily percentage price changes of oil over 30 days. In mid-April, volatility has dropped to 23%. The recent fall in oil prices led to volatility in 27%, a figure closer to the average level of 2015.
As noted by EIA, the volatility often reflects the market uncertainty regarding both the current and future value of goods. It is often caused by the new economic data, changes in market expectations or unforeseen events that may cause significant price adjustment.
The reasons for volatility in oil prices EIA refers to the uncertainty in issues such as future production volumes in key producing countries, global economic growth, particularly in China and other emerging market economies, the growth of demand for gasoline in the United States, the level of oil reserves.
In early may, oil speculators for the first time in a month lowered rates on the growth of quotations on the background of doubts about the sustainability of the recent rally, based on expectations of reduction of the glut in the market and sudden disruptions in supply, reported The Wall Street Journal. According to the London exchange ICE, last week hedge funds and other investors to reduce bets on higher prices after Brent, has set a historical record on their number.
May 9, the cost of a barrel of Brent fell to $43.60 — despite the fact that at the opening of trading maximum prices hit $46,48 per barrel. As noted by The Financial Times, the volatility in the oil market reflected the uncertainty in investor sentiment. They, according to the newspaper, wondered which factor will be stronger: forest fires on the oil fields in Canada or the strengthening of the dollar, coupled with the change of leadership in the energy sector of Saudi Arabia. On the evening of 10 may, the price of a barrel of Brent crude rose above $45.