Despite Turmoil, Price of Oil Remains Remarkably Stable
Libya has imploded, conflict has broken out all over the Middle East, yet the price of Brent crude has remained remarkably stable, varying only within a $5 range over the last year, according to a report from the Energy Information Administration.
July marked the 13th month in a row that prices had remained within a range of $107-$112 per barrel. "This price stability has been remarkable compared with the volatility seen as recently as two years ago, when Brent spot prices ranged from as high as $125/bbl in March 2012, to as low as $95/bbl in June 2012," says the report. "Implied volatility (a measure of expected price variation) for the near-month Brent futures contract has averaged 18% over the past 12 months, compared with 28% during the previous 24 months."
Production in OPEC countries has been interrupted but output from non-OPEC nations - namely Canada and the United States - has made up the difference. The price of West Texas Intermediate has been consistently about $5 below the Brent benchmark. Now Libya has announced it is about to reopen it's largest port, bringing 560,000 barrels a day back on line. That could bring a further softening in the price.