The volatility in the oil market has reached its record-high, according to the US Energy Information Administration (EIA). The COVID-19 pandemic has destroyed demand and driven a deep contraction in oil prices since the beginning of 2020. In addition, the collapse of the OPEC+ pact also put heavy pressure on oil prices.
The CBOE Crude Oil Volatility Index (OVX) reached 190 on March 20, its highest point since its introduction in May 2007. The OVX index measures the expected 30-day volatility of crude oil prices by calculating price movements of financial options for WTI at Cushing, Oklahoma.
In March 2020, WTI crude oil futures prices witnessed four daily decreases of more than 10% and two daily increases of more than 10%. Since 1999, WTI futures have changed by no more than 2% of the prior trading day’s price about 70% of the time. WTI futures declined by 25% on March 9 and by 24% on March 18, marking its two most significant percentage declines since at least 1999.
