Oil’s implied volatility
On April 17, US crude oil’s implied volatility was 22.1%, which is 5.5% below its 15-day average. Usually, lower implied volatility supports oil prices. The following chart shows the inverse relationship between oil prices and oil’s implied volatility. Since reaching a 12-year low in February 2016, US crude oil active futures have risen ~143.3%. Crude oil’s implied volatility has fallen ~70.6% since February 11, 2016.
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In the next five trading sessions, US crude oil futures should close between $62.22 and $65.52 per barrel 68.0% of the time. The forecast is based on crude oil’s implied volatility of 22.1% and assumes a normal distribution of prices. On April 17, US crude oil June futures fell 0.5% and settled at $63.76 per barrel.