RIYADH: Hit by four-minute madness last Monday, a jittery market sent crude slipping by $4 a barrel. After having climbed to the highest level in more than four months on September 14, after the US Federal Reserve announced plan to buy mortgage securities, bolstering economic optimism and on prospect that protests across the Islamic world on blasphemous film may ultimately lead to supply disruptions.

Pundits remain perplexed on the real cause of the slippage: an input error by a trader (“fat finger”); liquidation by a hedge fund; falling prices triggering stop-loss orders placed at $115; heavy turnover by computer-driven trading programmes; the growing bearish tone of the global economy or some complex interaction among all these factors, yet no one seems certain.

The plunge was reminiscent of previous flash crashes in the oil market (May 2011) and equities (May 2010) when prices dropped abruptly without any apparent fundamental cause. On May 5, 2011 Brent oil futures went down as much as $13 a barrel. Though the May 2011 and last week’s slump appear unrelated, yet in hindsight, the two had a factor in common: Both erupted at a time of intensifying debate over releasing emergency oil stockpiles.

And crude markets continue to be bearish, trading at near a six-week low after US stockpiles climbed the most since March, Chinese manufacturing shrank and Japanese exports fell, signalling fuel demand may be slowing among the world’s biggest crude users. Indeed the US crude inventories surged the most since March as production and imports rebounded from Hurricane Isaac.

The US Energy Department said supplies rose 8.53 million barrels last week, more than eight times than what was projected in a Bloomberg survey. Imports arrived at the highest rate since January and output increased.

And in the meantime, the fundamentals do not appear supporting the markets. There was definitely some, initial euphoria about the US Fed move, making additional purchases of debt in a third round of so-called quantitative easing. The move followed a European Central Bank bond-buying announcement on September 6. Yet that is gone now.

The economic picture isn’t healthy enough to support prices near triple digits. “Prices were getting uplift over the last couple of weeks from the EU and US quantitative easing, the anti-Islamic film and maintenance in the North Sea. These three factors are no longer enough to prop up the market,” Mike Wittner, head of oil market research at Societe Generale SA in New York too believes.

Markets now appear giving more credence to an emerging bear case for oil, which rests on an increase in Chinese-Japanese tensions, doubts about Spain’s well-being and anxiety about continued global economic weakness.

And one of the most apparent underlying factors behind crude market slump has been the speculation that Saudi Arabia is moving in to rein in the crude bull.

Saudi Arabia is pumping around 10 million barrels a day of crude and will produce more if customers demand, a Gulf official was quoted as saying in western press. Riyadh has reportedly offered customers in the US, Europe and Asia, extra oil supplies to offset rising prices, the Financial Times reported. “The current oil price is too high.”

The Gulf based oil official told the Financial Times that the oil price, which rose to a four-month high of $117.95 last week, was “too high” and that the kingdom “would like to see oil prices back to $100 a barrel”.

Opec delegates too are underlining that Riyadh was attempting to bring prices down. “The Saudis are actively managing the market,” added another senior oil official from an African Opec nation.

And with Saudis ‘actively managing the markets,’ crude prices were bound to cool down and so it did. Despite the concerns all around, interestingly, Riyadh continues to be the only mover and shaker of the energy world today.