US crude oil’s implied volatility

On November 9, 2017, US crude oil’s (UCO) (OIIL) implied volatility was at 24.4%—1.4% more than its 15-day average.

US Crude Oil’s Price: Could Reach $60 Next Week

Oil prices and implied volatility are usually inversely related. On February 11, 2016, US crude oil active futures fell to a 12-year low closing, while the implied volatility was at 75.2%. Since then, the implied volatility has fallen 67.6%, while oil prices have risen 118.1%.

Oil prices in the next seven days

Based on the implied volatility of 24.4% and a standard deviation of one, US crude oil active futures could settle between $55.24 and $59.10 per barrel. The model is based on the assumption of a normal distribution of prices. The period for this price range is the next seven days with a probability of 68%.

On November 9, 2017, US crude oil active futures settled at $57.17 per barrel—4.7% below the $60 level.

Any upside in oil prices could be a positive development for the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA). We discussed their short-term relationship in Part 2 of this series.

Oil’s bullish sentiments could add gains to energy ETFs like the Fidelity MSCI Energy ETF (FENY) and other ETFs that we discussed in the previous part.

Latest articles

Marathon Petroleum (MPC) stock has been tumbling in Q3, driven by geopolitical tensions, oil price uncertainty, and weaker refining conditions.

This week, AT&T CEO Randall Stephenson noted that AT&T (T) is on track to reduce its leverage multiple to about 2.5x by the end of this year.

Jeff Bezos announced that Amazon had placed an order of 100,000 electric delivery vans from Michigan-based startup Rivian.

Bad news on the trade war front appears to have led to a fall in the broader US equity markets today. Cannabis ETFs were also trading in the red.

Energy Transfer (ET) stock has recovered in the last two trading sessions after investors hammered it on its plans to acquire SemGroup (SEMG).

Software-as-a-service company Datadog (DDOG) made a smashing debut on Wall Street yesterday. After its IPO, DDOG's shares surged 40% in intraday trading.