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Brent Crude Oil Volatility

Platts Oil Volatility Analytics is a detailed, statistical-based report providing you with the essential and insightful market intelligence that you must make trading and hedging decisions with conviction.

Video Transcript
Brent crude oil volatility: November outlook

By Vito Turitto, supervisor, quantitative analysis
Welcome to the Snapshot, a collection analyzing the forces shaping and driving global commodities markets right now.

The Dated Brent market went by means of a big structural change within the month of October. The large discount WTI crude kept buying and selling at in opposition to Brent opened up arbitrage opportunities in each Europe and the Far East.

In reality, numerous European and Asian refiners began to take a look at American candy crudes, like WTI Midland or Eagle Ford, as a cheap different to BFOE grades putting stress on each the North Sea and Mediterranean markets.

The Brent CFD forward curve began altering shape, as a consequence of this strain, and by October 10 its first three tenors moved in contango whereas the remainder of the curve remained in backwardation.

In the second half of the month, your complete CFD curve switched again to backwardation, because of a good Chinese demand and worthwhile refining margins, and such wti crude oil price online term structure strengthened even additional providing an incentive for market members to sell prompt the entrance finish of the curve and unload storage.

Internationally, US crude export reached the document excessive degree of two.1 million b/d, American inventories declined for the whole month of October, Saudi Arabia said that it will restrict its exports to international customers to 560 thousand b/d beneath their requests while OPEC revised up its forecast for total global oil demand in 2017 and 2018 which, based on their analysts, ought to contact 96.8 and 98.1 million b/d respectively.

The Volatility Premium averaged 15.7% within the month of October which is increased than its three-month and 12 months-to-date values while it is nearly twice as high as the 2-year common which implies that it’ll tend to normalize over the coming weeks.

The Volatility Premium will are likely to slim over coming weeks which means that the market is more likely to expertise increased turbulence in the short term however, total, the premium will are inclined to stabilize favoring an uptrend in Brent costs.

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Dated Brent’s month-to-month volatility closed the month of October buying and selling at 22.Eight% which means that it falls throughout the 20-25% volatility range and it has eleven.Eight% chance to stay there.

However, the Probability Distribution evaluation signifies that the volatility is extra wti crude oil price online likely to increase and wti crude oil price online reach the 25-30% interval the place it has 19.2% likelihood to coke remain. Nonetheless, it’s important to notice that the rise in volatility may cause some brief time period retracements.