2021-12-28

SPR Release Price Drop Reversed, Crude at Decision Line

Does the Baizuo administration know that the Federal Reserve is intentionally driving up oil prices? Insterad of tackling inflation, the Federal Reserve stepped on the accelerator in December. Inflation will be worse and will last longer in 2022 thanks to the Federal Reserve increasing QE by 56 percent above their target level in December, at least as of last week. Theoretically, the Federal Reserve could sell $50 billion in assets this week to hit their target, but the action in the stock market says they have not.
Unfolding monetary and political disasters aside, crude oil is at an important horizontal. It peeked above earlier this year before falling. It has only traded above this level during the blow-off inflationary top that ended in 2008 and the subsequent echo boom caused by massive Chinese stimulus and rounds of central bank stimulus, which concluded in 2014. It makes sense that crude oil is at this line again following another round of unprecedented fiscal and monetary stimulus. If the stimulus is over, it makes sense for crude to reverse lower from here. If the Federal Reserve is lying about tapering as December indicates, then there is no ceiling on the price of crude oil because the Federal Reserve will lose control.

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