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E-Mini Crude Oil Futures Volatility Forecast (27/03/2011)

The E-Mini Crude Oil futures moved higher as we correctly forecasted the last week and we hope you all took advantage of our successful market view since futures prices achieved $ 105.6 a barrel. A great trade indeed!!!

The volatility is now in its equilibrium range and it is approximately 1.58% (25% annualised) but even if the TGARCH plot is still downward sloping there might be a great chance for a last rise before heading south again.

The volatility should remain stable in this area in the next 2 trading days but there is a big possibility that a sudden increase towards the 2% (31.7% annualised) could push the market down.

Furthermore, the strengthening of the dollar could favour a further drop of the price that should retest the $ 100 – 101 a barrel zone.

The staff of HyperVolatility remains moderately bearish on E-Mini Crude Oil futures because it appears that a first sideways movement would be followed by a price drop.

On the other hand, the political crises and the war in Libya could change the situation in a matter of a few minutes since Libya is the 12th largest oil exporter in the world and although it decreased its extraction rate other OPEC partners, such as Saudi Arabia, Kuwait, and Qatari, are trying to even out the imbalance by pumping more oil out of their wells.

How the market is going to react to this? There is still a lot of uncertainty surrounding the oil market and the recent choppy trading sessions we had simply confirmed what we just stated.

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