In 2013 it was gold, this year the price of oil took it on the chin and the result was the worst performance for the United States Oil ETF (USO – 20.36) since the dark days of 2008. There are all kinds of theories over what is actually going on in the energy markets. I’m going to keep mine to myself and focus on what the numbers say.

With USO dropping 42% in 2014 and most of that coming in the fourth quarter the CBOE Crude Oil ETF Volatility Index (OVX – 50.24) reached levels not seen since 2011. I usually do not like to post charts where the lines cross like the one below, but I don’t think a different scale would do justice to the move in OVX over the last few weeks of 2014.

USO OVX Corrected

CBOE has data going back to early 2007 on OVX. The average for 2014 was 23.05, which does not tell the story of where we are now with respect to oil volatility. This past year did witness the widest recorded high low range for OVX which is a function of just how complacent energy traders were at the beginning of 2014 and that OVX put in an all time low before things got interesting. They were anything but complacent at the end of 2014 as the average OVX close in December was 47.80 and the index finished the year over 50.

OVX Table As I said there are several opinions as to what is up with the price of oil. Whether it is to muzzle Putin with respect to his ability to use oil as a weapon or the desire of oil producing countries to put pressure on the fracking industry. The one thing we can agree on, with OVX over 50, is that the market expects more headline grabbing moves in the price of oil to begin 2015.

For more insight and thoughts about 2014 join me for a 2014 volatility wrap up webcast this coming Monday (1/5/15) at noon Chicago time – register at