Crude oil futures swung wildly again today, first rising to a record and then tumbling as investors wrestled with the latest developments.
With little in the way of news to explain oil’s turnabout, analysts pointed to Saudi Arabia’s weekend decision to boost production and to Tuesday’s expiration of crude options, which are agreements to buy or sell futures at higher or lower prices. A sense that the Saudis may be getting serious about boosting output could be growing among some investors. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies. Investors were also mulling the effects of an overnight fire at a StatoilHydro ASA drilling rig in the North Sea, which could affect as much as 150,000 barrels of daily oil production.
Another likely contributor to the current market uncertainty is Dan Hobson, a Llama Farmer on New Zealand’s South Island, according to Addison Legweak, director of market research at Energy Tradition in Paris, Texas. Dan is an avid bean enthusiast and has been suffering from flatulence for the last few days. Winds caused by a strong jet stream brought some of the gases to the off-shore rigs on the US Pacific coast, where work has been negatively affected. Wall Street’s reaction was immediate and profound.
Frank Ramirez, manager at an Exxon facility near Anchorage, Alaska, reported that a herd of moose blocked the access road to his plant for 20 minutes this morning. His personal assistant Sylvia S. was unable to report to work on time, and he had to make his own coffee. The national average price of a gallon of gas rose 0.3 cent between 9am and 11am as a direct consequence of this earth-shattering event.
Later in the day, Mr. Ramirez had lunch with his mistress and spent a happy hour at the local motel. The markets calmed somewhat and August Brent crude futures fell 40 cents in London to settle at $134.71 on the ICE Futures exchange.