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Strategies & Market Trends : ahhaha's ahs

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To: grusum who wrote (18479)	6/23/2011 1:26:45 PM
From: ahhaha	Read Replies (1) of 24758

Yes, but you can't expect the paltry supply from the SPR to affect the actual market. I was thinking more in terms of the futures market. The futures market will mark oil down to equilibrium which I guess is at something like $80. Pressure rises for the Saudis to stop over supplying. Meanwhile, a psychology develops that expects the tap to persist. If the tap is shut off, the futures market runs up price to $100, and then moves to $120 if OPEC extra supply which was designed to get price down is eliminated. The oil futures market is highly psychological and has been poorly correlated to world D/S as mentioned repeatedly at this place over the years. One has to think of the parallel between the creation of Permanent in QE2 and the extremely poor response to it in C&I, a purely psychological effect which has the mark of DM on it. There is no right answer here, since there's many possible scenarios. Most of them work in the opposite of their intent which is typical of 'crat moves. 'crat moves involve expediency as you indicated. The principle of free market requires that authority doesn't interfere.

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