Phil Flynn: How Fed Saved Oil And OPEC From A Total Price Collapse

The Federal Reserve promise to maintain the target range for the federal funds rate at 0 to 1/4 percent and maintain its existing policy of reinvesting principal payments from its securities holdings to provide additional accommodation or a second round of quantitative easing if necessary, helped the oil market ignore some of the most bearish fundamentals in decades. Just this week the Energy Information Agency reported that total U.S domestic oil product inventories hit 768.1 million barrels which is the highest level since 1990 since the Energy Department began reporting weekly data.

The figure doesn’t even include ethanol stockpiles which add to the bearishness and the fact that demands in this shoulder season is even weaker than normal. With an economic outlook that is deteriorating and a glut of supply, oil prices should be getting annihilated yet despite this historically bearish outlook, oil losses in the weakest demand period of the year are only modest. The Feds impact on the price of oil is an undeniable fact and there are many reasons for that. First and foremost is the impact of that policy on the.....Read the entire article.

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