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IEA Already Considering Extending Oil Release Period, Fireselling More Crude To China

Tyler Durden's picture


Following the abysmal decision by the Obama administration, presented in IEA letterhead, to release crude stockpiles, the resulting lower prices lasted less than one week, and in the case of gasoline, the price has actually surged way above the decision day fixing. So what is an administration with no credibility to do? Why double down of course, and sell even more crude at firesale prices to the Chinese. Per Reuters: "The International Energy Agency could decide by mid-July whether the release of strategic oil reserves needs to be extended for a month or two, an official said." And there is that transitory word again: "Richard Jones, deputy executive director of the
IEA, said he believed the release would be temporary since demand would
likely drop in the fourth quarter." Well demand may drop, but the last time demand was actually relevant in price discovery was sometime in the 20th century. Welcome to the era of oil prices defined by monetary policy.

From Reuters:

"We do believe it could be temporary but we have to see how the market evolves. There could be other disruptions, for example, we are compensating for the losses in Libya," Jones said at an event in Mexico City.

A decision on whether to extend the release could be made around the third week of July, he said.

"It will be up to our member countries, they could decide to continue it for a month or two. I don't see that we'll need to continue it for very long because we see demand declining in the fourth quarter, so we think it's a temporary measure."

Sure, blame Libya. And if possible please keep antagonizing an already irrational OPEC sans Saudi, which can't wait to receive even loss for the oil it exports, and may take a few weeks to realize that a several day export embargo will generate a far greater return in the long run that continuing to kowtow and retreat, for the time being, in the latest war of attrition with the IEA.


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Thu, 06/30/2011 - 09:04 | 1415044 lizzy36
lizzy36's picture

When they  say "extend the release" do the mean "ADD" to it, or merely extend the time the initial release could be taken up?

Thu, 06/30/2011 - 09:07 | 1415077 FrankIvy
FrankIvy's picture

I thought about this too, but I'm ambivalent as to whether it was an odd choice of words or an intentional choice of words.

My best guess is that they are contemplating a Release II, but they don't want to call it that, and so they came up with "extension," to make it seem like less of a second dumping so shortly after the first dumping, which might suggest that the first dumping was a failure, and even more pulling on the knot in a misguided attempt to loosen it.  Or an outright move to kick the can down the road, as they must know that oil supply constraints are the root of the problem.

Thu, 06/30/2011 - 09:15 | 1415103 mayhem_korner
mayhem_korner's picture

I think they really mean "extended release," as their twice-a-day SSRI's don't seem to be cutting it...


Thu, 06/30/2011 - 10:03 | 1415304 BorisTheBlade
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The International Energy Agency could decide by mid-July whether the release of strategic oil reserves needs to be extended for a month or two, an official said.

I suppose it means that they intend to add some uncertainty into language so as to create more flexibility in interpreting what they said going forward.

Thu, 06/30/2011 - 09:04 | 1415045 dcb
dcb's picture

It makes me insane that the answer is not to blame monetary policy for the price spike, and to release oil from reserves to counter the monetary policy. It seems th elite will take any tactic to make sure they avoid actually having to deal with the cause of something and instead try to deal with the effects. this of course makes the situation worse in the long run

Thu, 06/30/2011 - 09:12 | 1415080 Confused
Confused's picture

Agreed. This move is strange. There has to be more to it than just "trying" to keep the price of oil down. Long term consequences of these moves are much worse. Perhaps I'm wrong.

Thu, 06/30/2011 - 09:15 | 1415088 qussl3
qussl3's picture

Bribing China to bail out EZ? Very unlikely tho.

More likely covering up for Japan having already run through their SPR maybe?


Thu, 06/30/2011 - 09:23 | 1415141 centerline
centerline's picture

It's called being broke.  Cash flow is a bitch when your credit card is frozen.  Got to sell some black gold to afford the next 8-ball.

Thu, 06/30/2011 - 10:31 | 1415427 gorillaonyourback
gorillaonyourback's picture

 Peak oil is a bitch


Crude oil futures extended gains on Wednesday, climbing to a one-week high after a government report showed that U.S. crude oil inventories fell significantly more-than-expected last week, easing concerns over a slowdown in demand from the world’s largest consumer.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD94.53 a barrel during U.S. morning trade, jumping 1.85%. 

It earlier rose as much as 2% to USD94.72 a barrel, the highest price since June 22. 

The contract traded at USD93.85 prior to the release of the EIA data.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell more-than-expected in the week ended June 24, declining by 4.4 million barrels, nearly tripling expectations for a 1.5 million barrel decline. 

Crude supplies fell by 1.7 million barrels in the preceding week.

Total U.S. crude oil inventories stood at 359.5 million barrels as of last week, remaining above the upper limit of the average range for this time of year.

Total motor gasoline inventories unexpectedly declined by 1.4 million barrels, confounding expectations for a 0.8 million barrel increase.

U.S. crude oil imports averaged just under 8.9 million barrels per day last week, down by 271,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.8 million barrels per day, 891,000 barrels per day below the same four-week period last year.

U.S. crude oil refinery inputs averaged about 15.2 million barrels per day, 31,000 barrels per day below the previous week’s average. Refineries operated at 88.1% of their operable capacity last week.

Gasoline production decreased last week, averaging nearly 9.1 million barrels per day. Distillate fuel production increased last week, averaging about 4.4 million barrels per day.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery surged 2.2% to trade at USD110.89 a barrel, up USD16.36 on its U.S. counterpart.

Thu, 06/30/2011 - 09:26 | 1415152 FrankIvy
FrankIvy's picture

dcb wrote:  "It makes me insane that the answer is not to blame monetary policy for the price spike, and to release oil from reserves to counter the monetary policy."

Challenge your assumption.  It is not monetary policy driving the oil markets.  Sure, there is some impact on oil price from money pumping and fiat chasing non-paper investment.

But don't discount that oil supplies are tight and getting tighter.

If they know that oil supplies are going to be sharply lower over the next 12 months, then this move becomes obvious - they are preemptively attempting to prevent a rapid spike in price and gross civil discontent in the U.S..  Maybe they believe they can buy time to get through driving season - but the piper will be paid.

Thu, 06/30/2011 - 10:04 | 1415292 Citxmech
Citxmech's picture

This is going to be written in the same book as Gordon Brown's decision to sell Britain's gold.

On a scale of "Harbinger's of Doom," I give this one 2-1/2 horsemen.

Thu, 06/30/2011 - 10:39 | 1415446 gorillaonyourback
gorillaonyourback's picture


Thu, 06/30/2011 - 10:00 | 1415293 Bokkenrijder
Bokkenrijder's picture

Could the US be selling (expensive?) oil because they foresee a major downturn in crude?


What about the (proven) link between recessions and the price of oil?

Thu, 06/30/2011 - 10:40 | 1415451 gorillaonyourback
gorillaonyourback's picture

does your hypothesis make any sense to your own gut feeling?

Thu, 06/30/2011 - 09:02 | 1415046 FrankIvy
FrankIvy's picture



Thu, 06/30/2011 - 09:46 | 1415201 Tremain
Tremain's picture


FrankIvy I think you are spot on, spare capacity is now zero. Production decline rates are far higher than we are being told. This smacks of desperation and then some. If it were merely a matter of price then why not wait till oil tested the old highs around $140 a barrel? You can massage statistics and outright lie all you want, but you can’t print oil. I don’t think we’ll have to wait till 2012 before things get ....interesting.

Thu, 06/30/2011 - 09:04 | 1415058 buzzsaw99
buzzsaw99's picture

this is funny as hell

Thu, 06/30/2011 - 09:04 | 1415059 Fanatic
Fanatic's picture

QE3 IEA style.

Thu, 06/30/2011 - 09:04 | 1415062 AccreditedEYE
AccreditedEYE's picture

You don't fight controllers of massive proven reserves that supply to the world with arguably 40 days worth of supply.... Who the hell is running this show? Is this amateur hour? Can't wait for the return of the gas lines from the 70's. Hopefully, these idiots won't piss Canada off too.

Thu, 06/30/2011 - 09:24 | 1415144 DonnieD
DonnieD's picture

Pissing off Saudi Arabia is irrelevant. If the US finds a huge reserve should we not tap it because we'd lower the price of oil and piss off the Saudi's? They'll sell all their oil either way, whether to us or China. 

The real issue is the corruption and incompetence of the IEA and the Obama Administration. There is nothing "strategic" about the summer driving season. It's a patheitic political ploy by an incompetent leader who is seeing his chances for reelection go down the drain as the economy falls flat on it's face.

Should have never returned that call to Krugman, Obama.

Thu, 06/30/2011 - 09:38 | 1415185 AccreditedEYE
AccreditedEYE's picture

I'm not just talking about Saudi Arabia... I mean OPEC. And while, yes, they will sell their oil anyway, they don't need a whole lot of inspiration to put some pressure on their biggest customer and thus jack up profits.

In regards to the reserve tap, while I agree, it still takes a lot of time. Even the most incompetent political advisors should have been able to point this out as a mistake. As much as they are trying to not repeat the Carter years, their efforts are failing.  

Thu, 06/30/2011 - 09:48 | 1415213 Tremain
Tremain's picture

60 million barrels is less than one days supply of oil.

Thu, 06/30/2011 - 09:50 | 1415241 AccreditedEYE
AccreditedEYE's picture

Go do some homework on the SPR...

Thu, 06/30/2011 - 09:08 | 1415065 BeerWhisperer
BeerWhisperer's picture

Holy Smokes!


U.S. caught China buying more debt than disclosed

Thu, 06/30/2011 - 09:05 | 1415066 Cassandra Syndrome
Cassandra Syndrome's picture

Ha ha, they are losing the plot. Mad General Bunker syndrome. I'm sure Cognitive Dissonance can give a fancier appropriate title than that for us.

Thu, 06/30/2011 - 09:12 | 1415082 Oh regional Indian
Oh regional Indian's picture

Ultimately, a magazine has only limited rounds.

Shooting blanks by october? All these ridiculous decisions scream of somethign someone knows that most of us do not. Insane. 

Add to the ME powederkeg, irritate Iran....


Thu, 06/30/2011 - 09:18 | 1415100 Confused
Confused's picture

scream of somethign someone knows that most of us do not.


There must be something cooking. Price at the pump can not be the only reason. It just doesn't make sense.

Thu, 06/30/2011 - 09:32 | 1415159 FrankIvy
FrankIvy's picture

Confused wrote: There must be something cooking. Price at the pump can not be the only reason. It just doesn't make sense.

Maybe, maybe not.  It may just be trying to get out in front of the wave.  Or reverse wave.

Thu, 06/30/2011 - 09:55 | 1415244 Oh regional Indian
Oh regional Indian's picture

Which wave frank? They make the waves, they do nto need to second or third guess anything or anyone.


Thu, 06/30/2011 - 10:19 | 1415364 FrankIvy
FrankIvy's picture

E.g. - if they know a supply constraint is coming, they may be trying to get the price down in front of that constraint, because a move like this might be thought to have less impact in an obvious bull run than at this moment.

Thu, 06/30/2011 - 11:07 | 1415548 pazmaker
pazmaker's picture

ORI, Correct me if I'm wrong, but I recall you predicting something major/catastrophic would happen this week.  3 more days?

Thu, 06/30/2011 - 09:13 | 1415083 malikai
malikai's picture

 "Richard Jones, deputy executive director of the IEA, said he believed the release would be temporary since demand would likely drop in the fourth quarter."

Of course the releases will be temporary. Once the SPR oil is gone, there will be no more releases!

You all need to calm down, these guys are pros. They have it under control.

Thu, 06/30/2011 - 09:18 | 1415115 mayhem_korner
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Any release is a discrete event...doesn't have a duration.  There's only whether and how much.

Thu, 06/30/2011 - 09:23 | 1415117 SheepDog-One
SheepDog-One's picture

The oil release is for invasion of Iran which is within a couple weeks. Remember this post.

Thu, 06/30/2011 - 09:23 | 1415135 mayhem_korner
mayhem_korner's picture

Ain't gonna happen.

Thu, 06/30/2011 - 09:31 | 1415156 SheepDog-One
SheepDog-One's picture

What 'aint gunna happen', invasion of Iran? Its all over middle east news, read DebkaFile.

Thu, 06/30/2011 - 09:45 | 1415199 centerline
centerline's picture

WMDs.  Got to go get them WMDs.  The MSM has been warming that one up for while.

Thu, 06/30/2011 - 14:35 | 1416343 DaveyJones
DaveyJones's picture

Words of Mass Deception?

Thu, 06/30/2011 - 09:55 | 1415245 Silver Dreamer
Silver Dreamer's picture

I laughed when I saw the neo con DrudgeReport title yesterday of "Iran tests nuclear missile."  LOL  The drum beat for war is loud.  Nuclear missile?  Give me an effing break.  The title is a complete lie, but the sheeple sucked it right up I'm sure... 

Thu, 06/30/2011 - 09:53 | 1415256 centerline
centerline's picture

I saw that and thought the same thing.

Thu, 06/30/2011 - 09:56 | 1415251 malikai
malikai's picture

I'll bet you $1 that there will be no invasion of Iran.

Thu, 06/30/2011 - 09:59 | 1415268 centerline
centerline's picture

Maybe.  But who knows.  The whole ME thing has been set up as a perpetual war.  Very Orwellian.  I think it is a distraction.  It is about oil (of course).  And I think it is the ultimately "Plan B" -  the panic button that can be pushed if other plans do not succeed.

Thu, 06/30/2011 - 09:30 | 1415153 Hubbs
Hubbs's picture

Instead of follow the money, follow the oil? Going to military refuelers, storage facilities?

Thu, 06/30/2011 - 09:09 | 1415085 libertus
libertus's picture

IEA is selling the oil to China and they are paying for it by buying Euro debt. 


Thu, 06/30/2011 - 10:44 | 1415478 gorillaonyourback
gorillaonyourback's picture

ooohh,  evades the light of day.  good thought

Thu, 06/30/2011 - 09:11 | 1415089 the not so migh...
the not so mighty maximiza's picture

China doesn't want anymore funny money.

Thu, 06/30/2011 - 09:21 | 1415112 SheepDog-One
SheepDog-One's picture

Thats right, we're now fire-selling the last of our assets, China doesnt want any more funny money.

We've already sold off all our jobs and manufacturing, our once huge grain reserves are now nothing, now all our oil is sold off. If people cant see whats really going on, that will be their own very uncomfortable problem real soon.

Thu, 06/30/2011 - 09:20 | 1415105 John McCloy
John McCloy's picture

Like the Fed they are only left with rhetoric to engage reality. This is a trial balloon meant to get price lower before 4th of July but it won't work. What scares them the most is that they are one ME event, uprising or Iran lowering production from having 125 oil.
People need to be addressing the real issues which is the money printing and these guys are talking about Ringling Brothers solutions.

Thu, 06/30/2011 - 09:23 | 1415116 Caviar Emptor
Caviar Emptor's picture

Money printing yes, but alone won't do it: need to address oil consumption

Thu, 06/30/2011 - 09:28 | 1415142 SheepDog-One
SheepDog-One's picture

Invasion of Iran is already set and its very soon, thats what the SPR tap is all about, DebkaFile is all over it.

Thu, 06/30/2011 - 09:17 | 1415106 Caviar Emptor
Caviar Emptor's picture

Great planning from the central planners: draw down and burn what's left of the sweet crude! Great minds, great minds I tell ya. 

Anything but promote the one and only long term solution: cut demand and waste. 

Auto manufacturers and the Congressional auto-oil-complex lobby are going at Obama today for calling for 56.2MPG by 2025!!!! And hybrids already getting over 40 

Thu, 06/30/2011 - 09:30 | 1415164 SilverDosed
SilverDosed's picture

Geo Metro got ~40 mpg over 20 years ago. I was dicking around on compuserv on my 386 back then yet we really havent seen much improvement in mileage through all these years. Not surprising when the oil companies own the world.

Thu, 06/30/2011 - 09:46 | 1415223 FrankIvy
FrankIvy's picture

3 cylinder baby!  I changed the timing belt in that thing, 1st time doing it, in abouut 20 minutes.  Belt cost 18 bucks, as I recall.

Thu, 06/30/2011 - 09:39 | 1415189 FrankIvy
FrankIvy's picture

Caviar wrote: Anything but promote the one and only long term solution: cut demand and waste.

This is a long term solution - maybe - to a fast crash.  If we had the will to wean off of high energy use (in all forms), then and only then could we avoid social chaos.  We don't have that will.  Fast crash coming.

The ultimate problem is too many people.  The niche in which humans persist has been artificially enlarged by cheap energy.  As the cheap energy depletes rapidly, we will move toward the true size of the niche, and, at some point, it will be obvious that the niche has too many people in it.

Thu, 06/30/2011 - 09:17 | 1415111 PulauHantu29
PulauHantu29's picture

So what happens when all the "emergency stores" are released? INvade another oil rich country?

Thu, 06/30/2011 - 09:22 | 1415114 Cdad
Cdad's picture

Sell the entire SPR already!  Be done with it.  Zombie apocalypse, please.

Thu, 06/30/2011 - 09:20 | 1415123 SheepDog-One
SheepDog-One's picture

Last of americas assets gone, now time for invasion of Iran in a couple weeks.

Thu, 06/30/2011 - 09:27 | 1415139 Cdad
Cdad's picture

Fine!  Start 5 new wars, sell all assets, print more money, bail out more crooked banks, buy off politicians, raise the debt ceiling, spike the Euro to 1.60....

Let's get it on in a full blown, world wide stupidity contest...again!


Thu, 06/30/2011 - 09:39 | 1415150 SheepDog-One
SheepDog-One's picture

I want to see the 401K bathrobe brigade zombie riots myself, when Ben announces hes taken over their retirements for benevolent annuitization. OMFG will be hillarious!.

How people cant see the big picture right in front of their faces....well all their noses are mashed right up against the glass for a 'closer look' wonder they cant see. 

Thu, 06/30/2011 - 09:50 | 1415225 centerline
centerline's picture

LOL.  I can see multiple junks heading your way.  Seems that 401k talk and talk about government pensions that will at some point be recognized as flaming bags of poo get people all fired up around here.  The reality is that the money was already vaporized.  It just has yet to be called in.  Borrowed time is what we are on.  Expensive time at that.

Thu, 06/30/2011 - 09:49 | 1415235 SheepDog-One
SheepDog-One's picture

Yep true. Well no junks so far, but if people cant see the big picture right in front of their face and want to keep living in denial that the financial terrorists work for them and their best interests and comfy retirements, theyre in store for a real shocker soon.

Thu, 06/30/2011 - 10:27 | 1415410 j0nx
j0nx's picture

Americans still wouldn't care. They'd still be pissing and moaning about why their states won't enact gay marriage laws like NY or RI and still be water cooler chatting about how much weight Snooki has lost and what wacked out costume GaGa was wearing at her concert lastnight. Pathetic. I think the citizens in idiocracy were more intelligent than the current lot of Americans.

Thu, 06/30/2011 - 09:27 | 1415132 the not so migh...
the not so mighty maximiza's picture

I don't know about Zombies but Chinamen with eviction orders coming to mainstreet USA.  Good work Nobel Prize winners.  Chinese are the creditors with rights.  

Thu, 06/30/2011 - 09:54 | 1415238 FrankIvy
FrankIvy's picture

The not no migh wrote: I don't know about Zombies but Chinamen with eviction orders coming to mainstreet USA.  Good work Nobel Prize winners.  Chinese are the creditors with rights. 

I've seen this before.  Does anybody really believe the world's largest military will allow any real transfer to this creditor? 

Thu, 06/30/2011 - 10:25 | 1415401 Urban Redneck
Urban Redneck's picture

Soft Warfare. 

No guys in uniforms (other than the Chinese harbor master who says "No iPods on boat for USA!") 

Then there are guys in suits, and a the guys in jeans & t-shirts, and the guys in white coats...

Thu, 06/30/2011 - 11:22 | 1415598 viahj
viahj's picture

this is my position...China's paper claims on tangible US assets won't mean shit unless they are willing to invade the US and take physical possesion...just like Chamberlain's piece of paper didn't mean jack.

Thu, 06/30/2011 - 13:21 | 1416076 Clark Bent
Clark Bent's picture

They won't need a war to intimidate the U.S. into surrendering and paying tribute. You may have noticed that they have not been as austere in their military spending as the retiring Mr. Gates. I expect that incoming Leon Panetta will be even more inclined to take advantage of the "peace dividend" he imagines. American won the second world war largely on its industrial production. Are we ready to produce like that today? Perhaps Obama has another apology to offer as foreign policy solution. 

Thu, 06/30/2011 - 10:51 | 1415516 Mad Cow
Mad Cow's picture

Yes because their fiat is worth so much more! /sarc

Thu, 06/30/2011 - 09:23 | 1415118 youALREADYknow
youALREADYknow's picture

Send the IEA to try to flood the oil market, send the USDA to sell lies about food stocks... that's how you create the illusion of "transitory" inflation.

Thu, 06/30/2011 - 09:22 | 1415130 SheepDog-One
SheepDog-One's picture

SPR tap is for war with Iran very soon, within a few weeks, its all over Debkafile.

Thu, 06/30/2011 - 09:29 | 1415148 qussl3
qussl3's picture

Sauds agitating about nukes of their own too.

Fuck this is gonna get ugly.

Thu, 06/30/2011 - 10:13 | 1415327 FrankIvy
FrankIvy's picture

SheepDog: SPR tap is for war with Iran very soon, within a few weeks, its all over Debkafile.

Debka is a Zionist mouthpiece - read all with that huge grain of salt.

Thu, 06/30/2011 - 09:23 | 1415134 Kina
Kina's picture

Who is really buying it....or they are just buying selling it to themselves.

Thu, 06/30/2011 - 09:27 | 1415140 magpie
magpie's picture

Somehow there is a spring/summer 2008 feel to all of this; everyone getting too cozy with their own BS.

Thu, 06/30/2011 - 09:29 | 1415149 Ecoman11
Ecoman11's picture

Let's not forget that hurricane season is


Thu, 06/30/2011 - 09:46 | 1415221 fredquimby
fredquimby's picture

Does Missouri and Nebraska get involved with "hurricane season" normally?!

We wouldn't want a storm surge up the river now would we.....They only need 902ft at Cooper and they have to emergency shut-down....last current depth I can find is 901.60ft??

Thu, 06/30/2011 - 09:35 | 1415170 Hondo
Hondo's picture

We have to get these assholes out of office the next set of assholes can take over.

Thu, 06/30/2011 - 09:57 | 1415282 FrankIvy
FrankIvy's picture

Hondo - We have to get these assholes out of office the next set of assholes can take over.

In fact, I laughed out loud, and I don't do that much.

Thu, 06/30/2011 - 09:42 | 1415186 fredquimby
fredquimby's picture

My bet is that when they go to check the reserves (in salt caverns in Texas and Florida (!)), they are either empty or "gone off".

This ties in with those strange noises they heard in FL a while back I reckon....i.e the sound they heard was the SPR glug glug glugging out into the GOM!!


Thu, 06/30/2011 - 09:40 | 1415193 SheepDog-One
SheepDog-One's picture

Yea could very well be!

Thu, 06/30/2011 - 09:43 | 1415210 sbenard
sbenard's picture

It is treasonous to liquidate our petroleum reserve during a time when there is no supply disruption, solely for fabricated and political reaons. He is making us more vulnerable to not only supply disruptions, but the possibility of a real catastrophe like a sudden war in the Middle East. It makes you wonder if Obama is intentionally TRYING to destroy the U.S. and its economy.

Obama is THE most catastrophic error of our generation. He is the Deceiver in Chief!

Thu, 06/30/2011 - 10:06 | 1415303 FrankIvy
FrankIvy's picture

Sbenard: Obama is THE most catastrophic error of our generation. He is the Deceiver in Chief!

Well, he's in the running.  The next guy will probably be worse.  Bush Jr. was definitely worse - he was the guy running the show when the inside job known as 911 happened, and he's the one who got the Fakriot Act through.

Thu, 06/30/2011 - 10:27 | 1415387 anomalous
anomalous's picture

Backup Plan for post SPR (when it is gone)- take gasoline from the gas tanks of the rich, redistribute it. How fair is it for some people to have full gas tanks? The rich should have to report their gas gauge levels to the Energy Fairness Czar. And those bourgeois corporate jets, that fuel would be better burnt in AF1 flying over to the next climate change conference.

Thu, 06/30/2011 - 09:52 | 1415252 PaperBear
PaperBear's picture

QE-SPR is the new QE.

They are reeling out more rope by which the silver vigilantes will hang them by.


Thu, 06/30/2011 - 09:57 | 1415258 djsmps
djsmps's picture

I just have to laugh at this:

With US crude prices already down 16 percent from their April high, pundits and politicians everywhere were asking Thursday: "Why would President Obama tap the Strategic Petroleum Reserve when oil prices were already falling?”

The answer is simple: Obama knew this would have the maximum impact, hitting speculators on the chin, according to traders.

“Arguably the timing of the release is genius,” said Stephen Weiss of Short Hills Capital. “If the SPR had been released as crude worked higher, the effect would have been relatively momentary, but releasing it now, with the momentum on crude prices turning down, will add to the price decline as speculators hit their stops and margin limits more quickly forcing them to sell.”

Thu, 06/30/2011 - 10:14 | 1415267 PaperBear
PaperBear's picture

Mr Armstrong of Stamford, CT is on CNBC saying the SPR release is the new QE.

Are these guys making it up as they go along ?

Thu, 06/30/2011 - 10:03 | 1415290 Downtoolong
Downtoolong's picture

I still say the oil futures market manipulators on Wall Street are a lot more alarmed and concerned about these releases interfering with their rigged games than the Saudi’s and OPEC ever will  be.  This view seems consistent with the fact that most of the noise and soft protest over the release is coming from the financial industry. I’m the first to argue that the ability of these releases to curtail market manipulation and speculation is limited and can only work over a short to medium term. Nonetheless, it has probably already proven a better way to regulate manipulative trading in the oil markets than anything the CFTC, SEC, FINRA, or the NYMEX has ever done or ever will do.

Thu, 06/30/2011 - 10:13 | 1415354 FrankIvy
FrankIvy's picture

I guess I'm not convinced that "manipulation" has been so bad that it requires this sort of heavy-handed manipulation.  The net effect is that price went down and then came back up over a 6 day period.  Sure, this may serve to stifle long positions, as you have to worry about the .gov changing the supply picture, but the effect is very, very limited.  They've already shot about 10% of their load.

It seems to be preemptive.  There must be more to it than simple market rigging.

Thu, 06/30/2011 - 11:08 | 1415559 the grateful un...
the grateful unemployed's picture

too many counter-(intuitive) punches here. a) Obama wants to put a bid under the price of oil, and head off worldwide deflation b) the Chinese in the meantime are doing their part, by placing a bid for that oil (out of necessity really, they have no SPR, and they have to keep making stuff to export) c) Obama was in Puerto Rico to ask them how badly do they want to be the 51st state? China is apparently in the running d) America doesn't need this oil as badly as some other countries. e) the DOD is our largest consumer, without a half dozen foreign wars there is more oil for economic development f) OPEC won't last, when the Jasmine revolution changes the political landscape g) Obama's reelection is real jeopordy if he subverts in the current American hegemony which dominates ME policy. I suppose he can make the ME a nofly zone with solar power jet fighters, if he had some. It's a huge problem for him, foreign policy wise.

Thu, 06/30/2011 - 11:45 | 1415680 buzzsaw99
buzzsaw99's picture

the squid et al must be short oil.

Thu, 06/30/2011 - 11:43 | 1415685 DosZap
DosZap's picture

I see a secondary nefarious reason for this uneeded IEA release.

There is ZERO reason for depleting our reserves.

Obama should be called on the carpet for this crap.

We just started War#6, launching missles now into Somalia.

Someone is on crack.

Deplete the reserves, and give the admin a reason for a Natl Emergency, when oil flies thru $140, and we Cannot  replace $60.00 oil, (or less cost) reserves,cause we're a broke dikdog.


Thu, 06/30/2011 - 11:52 | 1415718 Mr Kurtz
Mr Kurtz's picture

According to this interview, the release of oil from the strategic reserve is the beginning of  a subtle form of QE3

Thu, 06/30/2011 - 13:58 | 1416223 HungrySeagull
HungrySeagull's picture

This is such goddamn fucking BULLSHIT!

Piss that oil away because we don't know what the fuck we are doing? OMG If there is a actual shooting war, our fucking Military is gonna have to improvise really quick on what little there will be left of SOR.

I love this Nation and I will be goddamned if these shits are so stupid as to release oil the way teenage boys leak whenver they see a cougar walk by.


Thu, 06/30/2011 - 17:08 | 1416949 PulauHantu29
PulauHantu29's picture

The more they extend and dump oil into the market, the more I buy. Same goes for silver. Doesn't make any fundmamental sense to sell these hard assets in this common sense.


USO and Silver all the way Baby!

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