OilPrice.com By Irina Slav
- Hedge fund manager Andurand tweeted this week that oil markets are completely broken.
- The degree of oil price volatility has changed but the sources of this volatility have not.
- The good news for traders that dislike volatility, is that extreme volatility does not last.
“The oil futures market is completely broken. Moving down $10 in a day for no apparent reason,” tweeted hedge fund celebrity Pierre Andurand this week. Indeed, volatility these days is not what it was just a couple of years ago. Yet it may be a little excessive to claim the market has broken in an echo of the EU’s claims that the gas market there no longer serves its purpose.
The degree of oil price volatility has changed but the sources of this volatility have not. As always, it’s about fundamentals, the economy, and geopolitics.
Fundamentals served traders a surprise last year as economies began to reopen after the pandemic lockdowns. Demand for oil, which BP had stated peaked in 2019, surges so fast and so much everyone got surprised by higher prices.
