Expectations and Oil
By Arnold Kling
Over the two previous days oil fell $10.50 a barrel. By definition this is driven by news about supply and demand but has so much news come out so quickly?
Maybe the news is that the political wind in the U.S. is shifting in favor of more domestic drilling. Menzie Chinn says that the suggestion that long-term expectations about the oil market affect prices today is “disingenuous.” It might be that, or it might be sound economics.