(Bloomberg) -- Oil is flatlining.
Futures in London and New York are almost certainly heading for the narrowest annual price range since 2019 — marking an abrupt halt to years of bumper swings following the global pandemic and then war in Ukraine. West Texas Intermediate has swung in a band of $22.40 so far, a range that’s only been smaller twice in the past two decades.
The lack of major moves has been in stark contrast to the number of significant risks crude has faced this year — from retaliatory attacks between Israel and Iran to a slowdown in China, the world’s largest importer.
Instead paralysis has taken hold — particularly in the final months of 2024 — with crude volatility plunging as traders weigh up the risk of a surplus next year against a market in which OPEC+ output curbs have put a floor under prices.
“Market volatility is finally normalizing following the pandemic and Ukraine war shocks of the past few years,” said Ryan Fitzmaurice a senior commodities strategist at Marex. “There is a good chance the range holds next year too.”
Part of the reason prices have remained so calm is that many of the risks haven’t come alongside material supply disruptions. At the same time, spare capacity across the market has returned to more comfortable levels.
The Organization of Petroleum Exporting Countries has about 5.4 million barrels a day of supplies that it could bring online, according to the IEA. The addition of new refineries has helped bring margins back to normal, further depressing volatility.
©2024 Bloomberg L.P.