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Oil price volatility favors the upside, for now

Since the start of 2017, a barrel of oil has experienced one 5% drawdown in the past 64 trading days and has spent 244 trading days (non-consecutively) at more than a 5% gain over the same period. The chart shows a distribution of the price change of a barrel of West Texas Intermediate from a starting date of Jan. 3, 2017, at a given day through Jan. 26. Large movements, up or down, defined here as 5% and -5% percentage point price change, respectively, occurred more frequently over the period than smaller movements.

A barrel of WTI is up 25% over the period after being down as much as 19% in June. Strong support from hedge funds has been driving the recent rally as managers feel confident that OPEC and Russia are making a focused effort to reduce the supply that pressured prices lower.