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Volatility rises in the crude market amid heavy selling

Chris Weston
Head of Research
19 Mar 2021
Upgraded forecasts for Brent crude result in volatility as the crude market undergoes heavy selling. Could this be make or break time for the crude market?

As is typically the way, the analyst community upgrade their forecasts for Brent crude, which has been the case this week and in a twist of irony volatility arises, and the crude market undergoes heavy selling. Rinse, wash, repeat.

Range expansion has been seen front and centre through European and US trade cross-asset class. But of all the popular markets the 7% decline in SpotCrude stands out, representing the biggest decline since 21 April 2020 resulting in price closing out of the bullish channel it held since November. This may result in ever greater price swings.


Make or break time for the oil market

Buyers have supported SpotCrude into the 50-day moving average and strong horizontal support at $58.79 – will this hold, offering a compelling long opportunity for the oil bulls?

A break of $58.79 in SpotCrude, however, could be significant and attract a new wave of sellers, leading to a deeper correction - so it’s make or break time for the oil market and for short-term traders, the oil market offers great movement and superb two-way opportunity.

Capture the opportunity with Pepperstone

To capture the opportunity in the energy markets, we've recently made some key changes to our crude and NatGas products, which should resonate with all traders regardless of whether trading discretionary or automated (Expert Advisor).

Recognising that the cost to trade is a core consideration for any trader, we've recently significantly reduced our bid-offer spread on energy products, where SpotCrude and SpotBrent spreads will be as low as 2-pips in the more liquid periods of the day (typically between 08:30 to 15:15 CT) – this is an industry-leading spread and should greatly reduce the cost to trade for active traders.

We've renamed the products to become more intuitive when navigating the platform, with SpotCrude replacing XTIUSD, SpotBrent replacing XBRUSD and NatGas changing from XNGUSD.

The pricing of our rolling cash contracts hasn’t changed and remains priced off the active front-month futures contract.

With increasing volatility as traders assess moves in the USD, bond markets, and ever-changing supply and demand dynamics for the oil markets, there's some excellent two-way opportunity for short-term traders. With our improved suite of energy products, there's never been a better time to put these markets on the watchlist and express a view. Ready to trade the opportunity?

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