For people who believe that oil markets are rigged or broken, the first week of May offered Exhibit A.
That week, the price of crude oil plunged more than $16 a barrel, erasing about $32 billion of the market value of Exxon Mobil and presaging an easing of prices at the pump, where the cost of a gallon of gas had hit record levels.
On that Thursday alone, the price of oil fell off a cliff, tumbling more than $10 a barrel.
Yet the physical amount of oil in the market didn’t change that week. Libya’s oil exports had been offline for more than two months. In the oil world, the surface was relatively calm. But a couple of signs of economic weakness spooked traders, who suddenly worried that demand would be less than they had expected. Goldman Sachs, a believer in rising crude oil prices, predicted a temporary pullback. Poof! More than a tenth of the value of a barrel of oil disappeared.
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