There are a lot of rumors flying around the oil industry right now, and the financial news channels have no idea how to handle it.
One day, they'll be talking about OPEC abandoning its oil deal and letting oil prices fall.
The next, they'll be all over a drop in oil in storage in the United States, driving prices up. You'd be forgiven for not knowing what on Earth is going on…
And thinking you should just stay out of the energy market altogether.
But nothing could be further from the truth. In fact, today is a great time to get in. You see, there's a reason why oil prices nose-dived so fast two weeks ago…
And why they're recovering at record speed.
Why You Can't Trust the Mainstream Financial News
Last October, you saw what a French contact had shared with me about oil price manipulation. Now, "manipulation" is a serious word.
But so is what some companies are doing in the oil markets today.
You see, back then, the name of the game was betting on oil prices to fall and then scaring people to make it happen. The Chicken Littles from "The Sky Is Falling" brokerage, as I like to call them, have been making a handy profit this way for years.
Some of that still happens. When watching or reading financial news, always be sure to check whether the person selling you doom and gloom about oil has any personal stake in it. Too often, TV channels will require so-called experts to say whether they have invested in oil or oil companies, but won't ask whether they (or their families) are shorting oil.
The same goes for larger companies. Be careful when listening to an investment bank or hedge fund release its analysis on oil for free. Remember, these are companies. Their goal is to make money. If they are giving you their thoughts on where oil is going, you can bet they're hoping you'll believe them – and that they stand ready to profit if you do.
Investment banks, for example, are some of the largest short players on oil in the market. But trying to convince the public that oil is about to crash in order to make money off that crash is one thing.
The price manipulation my contacts are telling me about now is reaching a whole other level…
We've Not Seen Oil Price Manipulation Like This Before
Today's oil price manipulation, my sources tell me, looks different. Step one involves spreading rumors designed to send oil prices down. It doesn't matter how far-fetched they are, as long as they work. Maybe something suggesting that oil demand is crashing, or insinuating that OPEC's deal is about to collapse.
In other words, exactly the kind of rumors we saw in the run up to the oil "flash" crash in early May. And just as we saw then, these rumors have …
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.