Commodities has not been a great place for bulls recently. Oil made a big ugly candle a few days ago, and continues the poor price action today. reaching the 200 day average as of writing. Oil is a highly speculative asset, despite people often referring to it from a fundamental point of view, OPEC this or that. It seems Trump is the current winner post his recent tweet. Oil is an important input for the global risk puzzle. Markets can take some moves in oil, but the recent price action should start making a few “nervous”. 

Oil volatility, just as pretty much all other global asset vols, has been dormant for long, but is adding to the spike we saw last week. As a reminder, last years equity sell off started with rising oil volatility. The OIV index has gone from 24 to 31 in a very short time period. This is surely making some managers reshuffle risk.

Below chart shows the SPX (white) and Oil (orange), non normalised. Oil is a big driver of risk and an important risk indicator so watch oil very closely going forward.

Source, charts by Bloomberg