Besides time of year, anybody have any opinions on the lower volatility for CL? I realize all instruments have a cycle, but are there other factors in play? All rude, sarcastic and unnecessary posts welcome, (try a little reverse psychology).
Last year CL had a quiet period from Thanksgiving until Valentine's Day (there were about 4 big days in that 10 week span. This year I am trading accordingly. One note: the OVX, which measures oil volatility is about to equal the VIX, which measures the S&P 500 volatility. This would have been difficult to conceive of just three years ago. My hypothesis is that hedge funds are (legally) manipulating supply and demand, and thus, squelching volatility. Until there is a chance of a lack of supply at Cushing, volatility will remain low. See http://online.wsj.com/news/articles/SB119162309507450611 2007 article about the drawdown in oil at Cushing.
Yes, there's a seasonality issue as shown in the inventories charts @ http://marketrealist.com/2013/12/despite-large-draw-crude-inventories-oil-traded-lower/charts/#34202 (note: I use to have seasonality charts going all the way back to 1979 to 2009 that I had saved by in 2009. If I find it, I'll post it) Other factors for the low volatility in Crude Oil futures and Brent Oil futures: 1) We don't have the crazy economic (world) crisis like in 2008 resulting in very unusual volatility in Crude Oil not seen since 1996 accordingly to Bloomberg. Yet, I strongly believe the low volatility (overall) hasn't been seen like this since the late 1980's. 2) Low volatility in other key markets. Take a look at the VIX. 3) Agreements with Iran's nuclear program looks promising. 4) Low OVX implies stable markets. I prefer to view it as an increase in stability in the geopolitical arena. 5) No new surprises out of the Eurozone about its economic issues the past 2 - 3 months. Maybe we need a close encounter with a meteor collision course with earth to shake things up in the Oil markets...bring some excitement back.