Knowledge Problem

Inventory Data Moves Oil Prices Lower

In the “simultaneity of the determination of crude oil prices and retail information” department, expectations of increased summer gas inventories in the US has reduced crude oil prices. Note that this price change comes on the expectation of information on inventories that will be released next week.

This reminds me of one of my favorite movies, Trading Places (which was on TV last weekend), where information about crop predictions moved prices for frozen orange juice in commodity markets.

This seasonal pattern happens every year, and has been exacerbated over the past decade because of the seasonal and market balkanization effects of the federal fuel oxygenate requirement arising from the Clean Air Act Amendments of 1990.