US Crude Oil: Target Price Next Week

On April 25, US crude oil’s implied volatility was 22%, which is 2.7% 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 ~148.8%. Crude oil’s implied volatility has fallen ~70.7% since February 11, 2016.

Sign up for Bagels & Stox, our witty take on the top market and investment news, straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.

On April 26–May 3, US crude oil futures should close between $63.53 and $66.89 per barrel 68.0% of the time. The forecast is based on crude oil’s implied volatility of 22% and assumes a normal distribution of prices. On April 25, US crude oil June futures fell 1% and settled at $65.21 per barrel.

Any changes in oil could be important for equity indexes like the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA). The sentiment in oil and equity markets is often related.

These price limits could be important for oil-tracking ETFs like the ProShares Ultra Bloomberg Crude Oil ETF (UCO) and the United States 12-Month Oil ETF (USL). In the trailing week, US crude oil June futures rose 1.8%, UCO rose 2.9%, and USL rose 1.4%.