Publications: Notes at the Margin

Driving Blind: Bad Data Could Be Misleading Traders (April 20, 2015)

 

Judging by oil price movements in the last weeks, oil traders may also be “driving recklessly blind” at the moment. Their buying has pushed prices higher and higher. Producers, in turn, have taken advantage of this misplaced optimism to hedge more production, prolonging the inevitable price drop. The blind buying was particularly apparent last week as WTI prices shot up $5 per barrel. The recent purchases have been motivated by possibly misleading forecasts of strong gasoline demand issued by the International Energy Agency and petroleum reporting organizations such as Argus Media. Producers, in turn, have taken advantage of this misplaced optimism to hedge more production, prolonging the inevitable price drop.

 

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