Volatility in Crude Oil Prices*

Prices for oil, like those for many other commodities, are inherently volatile and volatility itself varies over time. In recent years, the oil market has been characterised by rising, and at times, rapidly fluctuating, price levels. In the last nine months alone, crude oil prices have fluctuated in a wide range from $75/bbl to $125/bbl. However, careful examination of historical patterns shows that the volatility observed during 2008-2009 is actually lower than the peak observed in 1990‑1991.

Volatility: How to Measure It*

Prices for oil, like those of many other commodities, are inherently volatile. In recent years, the oil market has been characterised by rising, and at times, rapidly fluctuating, price levels. In the last six months alone, oil prices have fluctuated in a wide range from $75/bbl to $125/bbl.