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Volatility in the oil markets is now higher than during the financial crisis

Volatility in the price of oil is at its highest level since 2009, as speculation in the markets about whether or not producers are ready to take action to try and boost prices, as first reported by Bloomberg.

Oil slumped to a 12-year low during trading on Thursday, but is up as much as 5% on Friday morning as the world’s most important commodity bounces back.

Both major benchmarks, Brent crude, and West Texas Intermediate, surged back from big lows on Thursday. As of 10:30 a.m. GMT (5:30 a.m. ET) Brent is up by 5.1% to $31.59 per barrel, while WTI is up to $27.38, a gain of 4.5%.

The price of oil has been yoyoing massively in the past few weeks, with rises and falls of as much as 8% per day not uncommon. That volatility is reflected by the surge in the CBOE Oil Volatility Index, which has just passed its biggest peak since the 2008-09 financial crisis. The US based index jumped 7.3% on Thursday, and now stands at 77.79. Here’s how that looks:


Volatility right now is being largely caused by consistent speculation about what OPEC is going to do with regards to a cut. Late on Thursday afternoon, a tweet from a Wall Street Journal reporter saying that OPEC is “ready to cooperate on a cut” in oil output sent the price higher, and those gains have stuck so far.

Any major news, or even just chatter about a potential coordinated cut in the production of oil moves the market massively at the minute. A prime example came a couple of weeks ago, when oil gained 8% in a single session after Russia floated the idea of a meeting with OPEC. This surge lead the boss of Russia’s biggest oil producer, Rosneft, to call the market “idiotic”.

Commodity stocks surge

In what’s becoming a regular story for the markets, the oil pop has sent shares in resource and commodity companies soaring. Just after 10:30 a.m. GMT (5:30 a.m. ET) the five biggest mining companies listed on the FTSE100 make up five of the top seven stocks, buoyed by the oil rise.

Stricken Anglo American, probably the most volatile stock on the FTSE right now, is up by nearly 10%, further helped by a Bloomberg report that two firms are looking to buy Anglo’s niobium and phosphate mines in Brazil. Here’s the resources scoreboard:

  • Anglo American — up 10.59%
  • Glencore — up 6.87%
  • Rio Tinto — up 5.37%
  • BHP Billiton — up 6.25%
  • Antofagasta — up 5.42%
  • BP — up 3.64%
  • Royal Dutch Shell — up 2.32%

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