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.
"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.