Ever since the Russian invasion of Ukraine, oil markets have undergone immense fluctuations, leading many to discuss the “volatility” in the market. Although the term is often used to imply rising prices, it more accurately represents the rapid change of price in either direction. Before the invasion, crude prices typically moved by roughly $1 per barrel each day, sometimes higher and sometimes lower. Fuel price movements tended to move +/- 3 cents per day; a 7-cent move was rather unusual. That’s all changed.
Since late February, volatility has increased by several hundred percent. Crude oil price changes have exploded to $4.10 on a typical day – 340% higher than normal. Gasoline has seem a similar increase. Diesel prices have seen even more extreme volatility. Since Feb 28, daily price changes have averaged 17 cents – a 560% increase in volatility.
Volatility has serious implications for the last mile of the supply chain. Next week, we’ll explore what volatility means for fuel buyers, and how they can take control over their pricing to stabilize their budget.