Crude Oil Volatility >>>> Rational? Not Really

The announcement of the release of 60MM barrel of oil from the Government Strategic Reserve by the IEA took the rug out from underneath the price of a barrel of oil.  With globe consumption below the 2008 peak, these 60MM barrels is sufficient to run our globe for about 18 hours.  Immediately, oil traders the world over, react, or is that over-react?


In my view it is as it was presented to me during my initial trading training.  The markets were described as the biggest human experiment in the world - a window into human behaviour on a massive scale.  Each price movement is a commitment by those buyers, and those sellers to say that at that moment, this is a fair price from their perspective.  To me, the volatility of late is a very clear expression of the level of uncertainty and degree of  difficulty in making this commitment >>> to a price that accurately reflects the current perceived value.


With 18 hrs of 'free' supply pushed into the market, the price/value drops by almost 5% in less than 2 hours.  Rational?  I don't think so.  But it is yet another look at the response by investors as they walk on the eggshells of Greece, debt, and a return to uncontrolled greed circa 2007.  Meanwhile, blog debates rage saying oil will be at $140-150 by the end of the summer, or settle closer to $80 in the not to distant future.  Keep your stops tight.  Watching and Learning.