Energy OverView September 19, 2013

Oil prices caught the buying wave across all asset classes that was provided by the Fed’s decision not to reduce bond purchases, yesterday. While we had concluded that no tapering would be announced, we underestimated the market reaction to our correct call. Clearly, the market had priced in tapering and the associated removal of monetary support for commodity prices, in general. Gold soared, especially, on the news, as the inflationistas were heartened. It turned into a good old fashioned “risk-on” day. Oil prices also got support from the weekly inventory report, which showed further declines in inventories