From Gregor.us:
Did OECD leadership, under severe pressure from a financial crisis in Europe and a newly weakening economy in the US, release government oil inventories in part to please China? Was the IEA’s release of oil reserves a swap for the loosening of China’s capital reserves? (see: Wen Says China Is a Long-Term Investor in European Debt.)
Generally here at Gregor.us I avoid exactly this type of geo-political speculation. But weekend remarks from China’s Wen Jiabao that Euroland bond markets would be well supported by China comes after a dramatic move downward in Brent crude—the global grade from which the developing world makes diesel. The dumping of light sweet oil into the Gulf Coast market had its greatest price effect on Brent crude—not West Texas Intermediate—as WTI remains landlocked in Cushing, Oklahoma. Indeed, it is inescapable that OECD policy markers understood that global diesel and gasoil markets, starved for light sweet oil, would be most affected by the release. A swap, in which OECD oil reserves are offered in exchange for China’s continuing reinvestment of capital reserves, is a big win-win (temporarily) for both Western and Asian economies....MORE
