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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Crude Oil Update

Posted by WARREN MOSLER on October 26th, 2011

Still seems to me that the idea that WTI appreciates to Brent as the Strategic Petroleum Reserve release winds down over the next few weeks is playing out as previously discussed. The WTI discount depends on a serious glut condition persisting, and the wind down of the approx 3.8 million barrels a week being delivered from the strategic petroleum reserve will work to reduce the glut by that amount.

If so, WTI is marching towards $110/barrel which seems to me could trigger substantial market reactions.

And about the same time the super committee deficit reduction talks will be in full swing, euro financing stresses elevated, exacerbated by confirmation of the 0 gdp growth forecasts hit the headlines, and further slowdown news from China complicating things as well.

The ‘answer’ remains as simple as it is further away from political reality than ever, even though the right policy responses couldn’t be more attractive to both sides:

The US budget deficit is too small.

3 Responses to “Crude Oil Update”

  1. Tyler Says:

    We should do a full suspension of all federal taxes, to expire when the unemployment rate falls under four percent.

    Reply

  2. PG Says:

    Trying to seduce Americans, Warren? :-)

    We Europeans have as much right to government-state budget deficits as you do on the other side of the pond!-)

    Although, for the sake of History of Science ;-), we will prefer to use the expression ‘base-money increase’ rather than ‘budget deficit’ .-)

    Reply

  3. TC Says:

    Not exactly new news around here but interesting:

    http://ftalphaville.ft.com/blog/2011/10/25/711791/money-managers-and-commodities-the-case-against/

    As the OI marches upwards, the price does too.

    Reply

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