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* Oil volatility at highest since financial crisis
* Brent open interest hit record level last week
* Traders battle over next big move in crude
By Himanshu Ojha
LONDON, Feb 11 (Reuters) - Oil volatility has jumped to the highest level since the financial crisis, jolting traders who had been adjusting to a period of predictable declines following a near 60 percent crude crash between June and January.
Since the start of February, trading volumes have almost doubled as prices have risen - and fallen - by as much as 9 percent in a single session, while the number of active positions in the North Sea Brent contract soared to an all-time high.
Brent crude oil's 20-day realised volatility - a measure of how widely prices have oscillated over the last 20 days - soared to the highest level since April 2009 in the early days of February, a Reuters analysis shows.
(For a graphic showing Brent's volatility click: link.reuters.com/tut93w)
Traders were left stunned as the market snapped back to gain around 20 percent, even as many were betting that the market remains heavily oversupplied.
"This is a very dynamic market with a lot of volatility," said Rune Bjørnson, head of trading at Norway's state-backed Statoil, at the annual International Petroleum Week conference in London.
"It is challenging for an upstream company like Statoil to cope with such changes... but it gives opportunities on the trading side," he said.
The reasons behind the volatility spike are numerous. The simplest is that prices briefly stabilised after hitting a low of $45.19 a barrel in mid-January. After a few sessions of consolidation, enough traders were prepared to bet that the market had bottomed, sending prices jumping higher.
Those betting on higher prices have taken heart from news of declining rig counts in the United States and capital expenditure cuts by energy majors. But those betting prices still have further to fall point out that there will still be an oversupply of 1 million-2 million barrels per day for the first half of the year.
"What you're getting is a divergence of opinion and it's the breadth of opinion - the breakdown in consensus - that's leading to this volatility," said Gareth Lewis-Davies, senior oil strategist at BNP Paribas in London.
"That will only change once a consensus emerges in the market."
The Oil Volatility Index - a tradeable instrument known as the Oil Vix or fear index - rose last week to the highest level since 2011. While it has since tailed off slightly, with many oil traders busy at London's IP Week, it is not just volatility that has been up.
Trading volumes and open interest - the number of contracts active in the market - have leapt higher. Average trading volume across the Brent futures curve is up 42 percent so far in 2015 compared with last year, while volume in U.S. benchmark WTI has jumped more than 50 percent.
Open interest in Brent (counting all contracts across the futures curve) hit a record level of 1.87 million contracts on Friday, an increase of 27 percent on the 2014 average.
While some producers and physical traders have had to contend with the fast-changing price environment, the sharp moves provide a good opportunity for hedge funds and other speculative investors to enter the market
"These kind of clients are in these kind of positions for just a few days," said Hans van Cleef, senior energy analyst at Dutch-based ABN Amro.
"That could trigger more volatility and, of course, a rise in open interest."
The U.S Oil Fund, an exchange-traded fund (ETF) allowing retail investors to bet on rising oil prices, has more than tripled its net assets since June to $2.3 billion, accounting for some of the rise in volume and open interest.
"The ETFs are not responsible for all of it," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland. "Overall there has been a global increase" in open interest, he added, saying commercial producers are also buying new contracts to try to lock in prices after oil bounced.
Some traders or funds, including super-fast algorithmic or high-frequency trading programmes, may also seek to capitalise on and even maintain volatility in the short-term, as they stand to profit from quickly moving in and out of positions.
Market experts caution, however, that the price may again begin to trend strongly in one direction or the other once the outlook for oil becomes clearer.
"Certain traders are enjoying the movements that we've seen and might, to the small extent that they can, try and time their interventions in the market to lead to reversals on a day-to-day basis," Lewis-Davies at BNP Paribas said.
"Nonetheless they can't do that interminably, because once consensus develops, if you get in the way of that you'll get run over." (Additional reporting by David Sheppard; Editing by Cynthia Osterman)