Crude Oil Prices and the Economic Stimulus Package


In case you weren’t sure how much of an impact fiscal policy could have on the markets, you should take a look at this chart of July futures for Crude Oil.

Oil & Stimulus

One of my coworkers brought this to my attention the other day.

Of course you can’t necessarily say for sure that the economic stimulus plan triggered the latest big rally in oil prices. It’s an awfully interesting coincidence, though, don’t you think?

Why would there be a relationship? Because the stimulus package put about $150 billion back into the economy. Inflation comes in part from increasing money supply and partly from increased demand. The package was designed to accomplish both. The USD chart shows exactly that.

 Oil & Stimulus

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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
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  • Valera

    Yeap, this is clear as day and night.

  • hos

    It’s the perfect crime.

    Give Americans money in the form of a stimulus package, then plan to take it away with higher oil prices. They transferred $154 billion dollars over to the oil companies in seemling legal way.

    It’s better than a James Bond caper movie. Even Horace Goldfinger wasn’t so clever.

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  • Dennis Herman

    I would say there is a link between the two. I late Feb, early March there was a video on Google that linked the economic stimulus package to oil prices. There was 18 billion in checks to families and 70 billion to big businesses including investment companies and oil companies. Many of these companies received packages between 100 million and 250 million. Check out the financial records on oil companies and oil exploration companies for the second quarter.

    When I saw this I thought that soon the administration would be asking for rights to drill in areas that are now closed to oil drilling. The time is short for this administration and they want to make sure they have the rights for future investments. It is now or never in their minds.

    My best guess on phase two of this move will be, the big investors will pull their money out very quickly. This will cause a drop in oil speculation prices. This will create an excuse for the administration to give the oil companies even more government grants. They will claim that the oil companies had invested millions in exploration based on the speculation prices.

    If they do not get the drilling rights they will get billions more in government grants. The sad part is, the big oil companies will be the few that will profit form oil speculation and they will get paid for this. The government gave them the money to invest in oil speculation. They will make billions on oil speculation but will claim to have lost money. The government will appear to come to the rescue and grant them billions more.

    There are already news releases hinting at this outcome. Follow it closely.

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