Why not to read daily market reports

Yahoo 1-day oil price chart

Oil jumped this morning in New York. One of the most prestigious business news organizations explained it like this.

Crude Oil Trades Near Three-Week High as Venezuela Says $100 Price `Fair’ Oil traded near the highest price in three weeks as signs of economic recovery in the U.S. stoked speculation that fuel demand will increase in the world’s biggest crude consumer. Venezuelan Energy Minister Rafael Ramirez said $100 is a barrel a “fair price” for oil and that OPEC is unlikely to change its output quotas at its meeting later this month.

The guys writing this know that Venezuela has nothing to do with the price movement, as you can see by the lead they wrote. But the editors put Venezuela in the headline for the same reason they’d put Lady Gaga up there if they could — it gets you to click. Which, in the end, is the function of people like Hugo Chavez in the news — they draw readers, so the press keeps covering them. As readers learn more about them, they grow more likely to click on the stories. It’s a feedback loop.

But is there any reality to this? How do I know this isn’t really market-moving news? I recall this from November 2007:

We seek stabilization at $100 a barrel for several years.

That was Hugo Chavez. At the time, some hack wrote:

Chavez has increased the price he calls “fair” as oil climbed. In June, Chavez said the floor should be $60 a barrel; a year earlier he said $50 and, in 2005, $40. In 2002, he said prices of $22 to $28 a barrel were “right.” In December 2000, Chavez said, “We don’t want oil to increase to $40 or $50.”

One thought on “Why not to read daily market reports

  1. Kepler

    Of course. Right on spot. To a certain extent, Hugo the Small is a wee bit like Kim Jong-il with a different hairstyle.
    Kim Jong-il and his military get the tantrums when they see they ran out of food to calm down their people. They start throwing rockets to the sea, shooting across the border and saying they have nuclear warheads galore.
    Then they get the rice bags and the cash they want.
    Hugo the Small sees his thieves are running out of cash in spite of the biggest oil boom Venezuela has ever lived. He just needs to say something stupid and oil prices climb for some time a couple of dollars. Just a couple of dollars for some weeks is enough to buy enough cheap beer and import loads of black beans from the US or milk from Belarus or the EU.

    Setty, if you browse Venezuelan newspapers from 1998 you will see how Venezuelan ministers were expressing big hopes if oil prices could just climb over 16 dollars per barrel. Imagine how much is wasted now.

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