• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 7 hours EU has already lost the Trump vs. EU Trade War
  • 1 day Science: Only correct if it fits the popular narrative
  • 19 hours Crazy Stories From Round The World
  • 1 day Iran Burning: Shock Gas Price Hike Triggers Violent Protests After Subsidy Cuts
  • 20 hours Everything You Need To Know About Trump
  • 7 hours IEA predicts oil demand will grow annually at 1 million barrels a day for the next 5 years
  • 5 mins Pope Proposes New Sin: Thou Shalt Not Destroy The Harmony Of The Environment
  • 1 day Atty General Barr likely subpeona so called whistleblower and "leaker" Eric Ciaramella
  • 2 hours Water, Trump, and Israel’s National Security
  • 18 hours Impeachment Nonsense
  • 10 hours ‘If it saves a life’: Power cut to 1.5 million Californians
  • 2 days What are the odds of 4 U.S. politicians all having children working for Ukraine Gas Companies?
  • 2 days Who writes this stuff? "Crude Prices Swing Between Gains, Losses"

Explaining The Big Drop In Oil Prices

Oil

As I’m sure you are aware, over the last week and a half, U.S. stocks have taken a massive hit. The reason we are told, is that the widely followed and frequently indicative forex and Treasury markets are both suggesting that inflation fears are growing. It is understandable if all the potential ramifications of that elude you as inflation was last a real problem back when Reagan was President, but most know that it involves higher prices of goods and commodities. So, logically speaking, inflation fears should be pushing oil higher, right? Wrong.

(Click to enlarge)

As you can see from the above chart for WTI futures (CL), the U.S. benchmark crude contract has instead dropped around ten percent from the highs, following the stock market lower. If you think about it, though, that shouldn’t be a surprise. Stocks, like commodities should also logically trade higher on inflation expectations, but they are collapsing too, so something else must be going on. In fact, it is not one thing, but several things that make this seemingly counterintuitive move perfectly understandable.

First and foremost, what the stock market is reacting to is not the prospect of inflation per se; it is the prospect of the response to the prospect of inflation. Part of the reason that inflation has not really been an issue in the U.S. since the days of big hair and disco is that the Federal Reserve Bank has become a lot better at seeing the warning signs of rising…




Oilprice - The No. 1 Source for Oil & Energy News