Publications: Notes at the Margin

The Hoarding Instinct (June 16, 2014)


News of the sweeping revolution in Iraq sent crude prices higher last week. The price pundits, awakened from their long nap by the news, had a field day. Crude markets responded. Dated Brent jumped $4 per barrel. WTI went up a little less—$3.80—in cash markets. The media went crazy. Headline after headline shouted that crude prices had hit their highest levels in nine months. Behind the scenes, real oil women and men understood that the Iraq crisis had not reached the oil fields yet. Yet prices surged. The question is why. The obvious explanation is panic buying by refiners. The obvious explanation is incorrect.


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