Publications: Notes at the Margin

Can Anything Be Learned from Experience? (October 12, 2015)


The recent crude price increases have baffled many. The rise seems at odds with supply-and-demand calculations that show a growing crude surplus, an overage some believe is expanding by more than three million barrels per day. Furthermore, product markets show a confirmable increase in supply over demand. The explanation for this behavior, as discussed in this week's report, may be a forced liquidation of a long position accumulated by a large trading company. Such a liquidation could be offsetting market forces today in a manner similar to MGRM's manipulation in 1993, which cut crude prices more than thirty percent.


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