Analysis: As Liquidity Dries Up, Oil Braces for Whiplash Volatility

Intraday volatility for Brent is near 80%, the most since the pandemic collapse.

Julia Payne, Reuters

A $40 a barrel rise and fall in oil prices in March pushed many investors to exit the volatile trade and created the conditions for more wild price swings in the weeks ahead, traders, bankers and analysts said.

The Russian invasion of Ukraine has driven many commodity prices to all-time highs, stretching the finances of companies worldwide that trade, process and consume the raw materials. They have had to borrow more from banks to finance their purchases and to meet cash requirements around futures and derivative positions.

Intraday volatility for some commodities has also spiked. Brent volatility is close to 80%, a level not seen since May 2020, and heating oil is at around 120%, driven by headlines ranging from peace talks between Moscow and Kyiv to fresh sanctions on Russia.

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