Did Markets Know Obama Was Going to Tap Oil Reserve?

[thundley4]

Tapping the Strategic Petroleum Reserve was supposed to lower oil prices but instead has only raised questions about market manipulation.

The price of US crude actually is higher now than when the Department of Energy and International Energy Agency made the controversial move on June 23 to hit up the SPR in an effort to ease the gasoline burden on consumers and goose the economy.

At the time, critics blasted the move because oil prices already had fallen considerably – more than 16 percent in just two weeks’ time, in fact.

In retrospect, the price move is starting to look fishy to some traders.

Dennis Gartman, a hedge fund manager and author of the widely followed “Gartman Letter,” constructs a timeline of how the oil release came to be and the trading action surrounding it.

He notes the most recent peak of oil on May 2, discussions with Gulf oil ministers on May 5 as the price started to decline, and the ultimate announcement seven weeks later, when oil was around its near-term bottom.

The price drop leading into the SPR release indicates that the market may have been anticipating the move and selling oil accordingly.

“When presented this information in this simple but elegant format, how can we not believe that someone in a position of some authority did indeed know what was in the works regarding the SPR?” Gartman wrote.

“May 2nd was an outside reversal to the downside, marking the very top…the very absolute top in the crude oil market,” he said, referring to the trading pattern in which a high and low price on a particular day exceed those of the previous session. “It was followed by a massive, violent $9/barrel collapse on the very day that the Saudis were apparently being told of the decision to sell crude from the SPR!

http://m.cnbc.com/us_news/43658507

[NHSparky]

Newsflash, MSM--the other times oil has been released from the strategic reserve, oil prices also went up then as well.

[thundley4]

Newsflash, MSM--the other times oil has been released from the strategic reserve, oil prices also went up then as well.

True, but what I got was that Obama release came at the low point of oil prices. It was almost like the speculators were holding off on trading pending the release from the SPR.

[NHSparky]

Possibly.  But the markets weren't tipped off to it.  Oh, but if they had been, someone in the Obama administration would be in some SERIOUS doo-doo...

Seriously, they just reacted pretty quickly to the news, and knowing that our refineries simply don't have the capacity to refine it right away anyway, well, you get the idea.

[thundley4]

Possibly.  But the markets weren't tipped off to it.  Oh, but if they had been, someone in the Obama administration would be in some SERIOUS doo-doo...

Seriously, they just reacted pretty quickly to the news, and knowing that our refineries simply don't have the capacity to refine it right away anyway, well, you get the idea.

Can you blame me for expecting the worst from this administration?  After all, Obama is trying to woo back the big Wall Street donors.

[JohnnyReb]

Obama's plan for America.

Destroy her economy......done.
Devalue the dollar..........done.
Cause inflation..............done.
Raise the debt...............done.
Hamstring the military with low oir reserves....working on it.