Go Figure, Part I
After a few years (or decades) covering financial markets, you gain the ability to predict with uncanny insight how certain events might affect trading that day.
You also gain the ability to get it completely wrong.
We knew that Iranian officials would be coming out with a statement regarding the country’s controversial nuclear program, and we know that oil traders are mega-sensitive these days about Iran, especially following the recent capture and release of British military personnel.
Iran’s statements were anything but conciliatory: it announced it had entered an “industrial stage” in its ability to enrich uranium. The U.S. responded by calling it “another signal of defiance.” A sure sign of higher prices for oil, right?
Nope. Oil fell nearly $3 and settled below $62 per barrel, hitting a two-week low.
The most popular explanation was that traders were unwinding the risk premium already built into oil prices from the British military incident.