Oil eases, but avoids stocks-style volatility

LONDON, Feb 06 (Reuters): Oil fell for a third day on Tuesday, as a rout in global equities triggered losses across bonds, cryptocurrencies and commodities, although the crude price is in positive territory so far this year.

Even with Wall Street stocks posting their largest one-day fall since late 2011 on Monday and measures of volatility spiking to multi-year highs .VIX, reflecting heightened investor nervousness, oil has not suffered to the same extent.

Brent crude futures LCOc1 were down 66 cents on the day at $66.96 a barrel by 1155 GMT, but are still up 1.0 per cent so far in 2018. US West Texas Intermediate crude futures CLc1 fell by 55 cents to $63.60.

Since the S&P 500 .SPX hit a record high on Jan 26, the index has lost 8.0 per cent. Oil has shed 4.5 per cent, while cryptocurrency bitcoin BTC=BTSP has lost half its value.

A factor that could insulate oil to some extent against a bigger rout is the structure of the forward curve, where the prompt futures contract is trading well above those for delivery further in the future.

"We know that speculative positions both in terms of contracts and in allocated dollars are at an all-time high. Thus a real pain-trade has not yet hit the oil market," SEB head of commodity strategy Bjarne Schieldrop said.

"Longs have not yet started to flock to the exit door. If that happens, it will make the buying opportunity even better for the oil consumers who buy oil on the forward curve."