The Post-Election Price of Oil: Up, Up, and Away?

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The analysts at New York Global Securities, a major investment strategy firm, didn’t see a plot by oil companies to lower prices during the election. But they do believe speculators will now push up the price of oil to the extent they believe the government will let them get away with it. From their October 18 report, Speculation in the Oil Market and the U.S. Midterm Elections:

We believe that following the U.S. midterm elections on November 7, 2006, the price of oil is likely to test the tolerance of the market and the new members of Congress; that is, we believe that after the elections oil will appreciate until there is fear in the market that Congress will take action. It is too early to speculate on the exact level of the increase, but our recommendation at this time is to become progressively long oil at these prices as the election approaches, with the expectation that a topping test pattern will become clear shortly after the election. We believe that the last three major declines in the price of oil coincided with various U.S. Senatorial
hearings and expectations surrounding the upcoming U.S. midterm elections. We further believe that these events may have caused speculators within the oil markets to become cautious, resulting in a drop of more than 20% in the price of oil. With regard to the two prior declines, once the Senate hearings were over and the Senate did not take any significant action, the price of oil began to increase. We expect that following the current U.S. elections the price of oil will again rise testing the tolerance of the new Congress.

So far, it’s too early to tell if NYGS will be right.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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