volatility in the oil market is associated with the activities of algorithmic traders – Kommersant
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Recently, price fluctuations in the oil market have been very strong, and this is due to the activities of companies engaged in algorithmic trading, the agency believes Bloomberg. In the last two months alone, oil prices first approached $100 and then dropped to $70. Since the beginning of the year, oil price fluctuations have exceeded $2 in one day 161 times, and last year – 242 times, much more than in previous years.
As Bloomberg notes, this is not only due to events such as the escalation of the conflict in the Middle East, but also to the activities of the so-called commodity trading advisors (CTA) – algorithmic systems participating in trading. According to TD Bank and JPMorgan, in general, various algorithmic systems account for up to 70% of oil trades daily.
Bloomberg quotes several traders and analysts, according to whom it is the participation of CTA in trading that leads to high volatility in the oil market. In their opinion, the point is, among other things, that bots usually follow the trend in the market and reinforce it, that is, they sell when oil prices fall, which contributes to a further fall – and vice versa when they rise.
A decrease in the average price of Urals oil will not interfere with the budget plans of the Ministry of Finance – in material “Kommersant”.
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