Volatility Regimes
Volatility Regimes describe periods in which price fluctuations remain consistently high or low over time.
In commodity markets, volatility does not evolve evenly. Instead, it tends to cluster, creating regimes that shape risk perception, pricing behavior, and forecast uncertainty.
Interpreting Volatility Regimes
Viewing volatility regimes in context allows market participants to:
• Adjust expectations around price stability
• Better calibrate forecast confidence
• Anticipate shifts in underlying risk dynamics
Regime transitions
Transitions between low- and high-volatility regimes often occur alongside structural changes or external shocks rather than gradual market evolution.
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