The brutal implosion in oil that started back in October took black gold lower by some 45% from highs to lows we saw in late December. Since then, oil has bounced by 25% and has retraced over past two days after we hit the 50-day moving average. The 53/55 area is a significant resistance area to watch out for.

After the huge move lower from October highs, oil would best need a consolidation, as moves have been simply astonishing.

Once again, we can conclude that most extreme moves usually end abruptly after we see a massive spike in volatility. Below chart shows how oil (orange) has managed putting in local lows at all extreme spikes in the OIV index (oil volatility).

We have no great take on where oil is heading next, but note how oil has been leading to the downside since October when it comes to the oil (white) versus SPX (orange) relationship.

Source: charts by Bloomberg