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Prices work




This chart shows the news that has sent the commodity markets into another tailspin. According to the DoE, total stocks of crude oil (excluding the Strategic Petroleum Reserve) have surged this year, and recent increases have been much more than the market was expecting. Prices work. The high and rising prices of crude oil and gasoline have apparently conspired to increase supplies while also reducing demand, thus boosting inventories. In retrospect, it seems that prices were too high, so now they have to fall some. This is how markets balance supply and demand.

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