Price volatility in crude oil has hit this month its highest level since May 2007, due to coronavirus fears and increase in the glut of oil supply in the market, according to the U.S.' Energy Information Administration (EIA).
On March 20, CBOE Crude Oil ETF Volatility Index, known as OVX index, reached 190 -- "the highest value since its inception in May 2007," according to the EIA.
The spread of the novel coronavirus (Covid-19) and measures against it have caused economic contraction and low oil consumption around the world. In addition, OPEC+ members failing to reach a deal to curb their production created oversupply worries.
With decline in global crude demand and increasing oil supply, stock market indexes around the world and oil prices have been extremely volatile during the month of March.
On March 16, the S&P 500 VIX index, also known as the fear index, measured 82.7, "a level higher than any point during the financial crisis of 2008-09, the last time the global economy experienced a significant recession," the EIA said in a statement on Friday.
"Crude oil volatility is typically higher than the S&P 500’s volatility, generally because OVX represents changes in one commodity and VIX represents changes across a diverse group of 500 companies," the statement noted.
The EIA said that American benchmark West Texas Intermediate's (WTI) 25% decline on March 9 and the 24% decline on March 18 were the "two largest percentage declines in the WTI futures price since at least 1999."
During the following days of those declines, WTI prices rose by 10% on March 10 and 24% on March 19, "likely in response to announced plans from various countries’ governments that emergency fiscal and monetary policy would be forthcoming," the EIA added.
For Brent crude, the international benchmark plummeted by 24.1% on March 9 and 13.4% on March 18; however, in the following days, it soared by nearly 8.3% on March 10 and 14.4% on March 19, according to official data.
By Ovunc Kutlu