Stop Counting Crude Inventories

Here's a little mind game to get things going. How long should a 90-day strategic reserve last? The answer: anything but 90 days. The most likely course of action is that the reserve will be valued at its replacement cost, almost assuredly higher than the current price, and therefore be rationed rather restrictively, either by the market or by government intervention.

This is why statements such as "63 days of consumption" are so useful in identifying financial interlopers into the world of commodities. The same people who persist in treating stocks and bonds as GDP futures appear hellbent on treating commodity futures as inventory scorecards.

Even worse, many of these newbies have brought with them their bad habit of instantly capitalizing to the extreme every single economic datum. How else can we explain the waving of hands, ululations and firing of machine guns into the air with the weekly release of petroleum and natural gas storage data? Adults should act like adults, not like bond traders. ...