Earlier today oil fell sharply on a Reuters headline about Obama and Cameron agreeing to tap their respective countries’ emergency petroleum reserves.Obama spokesmen Jay Carney rebuked the report, and oil rose back, though it’s still down on the day, and below where it was before the rumour came out.
A question comes to mind: Are Obama and Cameron playing a mind trick on the oil market?
Michael Sankowski at Modern Monetary Realism talks up the idea of just talking about an SPR release as a means of keep the price of oil in check. After all, if traders fear this could come at any time, it could help to take any excesses out of the market.
It seems possible now that Obama and Cameron are trying to get this message out there, even if they don’t have plans to pull the trigger.
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