First the equivocal good news.
The February numbers are in, and the National Association of Realtors says the sales of previously occupied homes is up a non-sluggish 8.2 percent. And the latest Institute for Supply Management figures show the U.S. service sector grew in March at its fastest pace in more than two years. Moreover, the economy actually added jobs last month, manufacturing data is stronger and the stock market is well into five figures — and hovering around 11,000.
The bad news? Alas, these were also factors in pushing oil and gasoline prices to an 18-month high in the last week. Benchmark crude is now in the mid-$80s and appears to be ratcheting to $95 or higher.
And yet, oil consumption has fallen, U.S. motorists’ gasoline demand is flat and refiners are still well below capacity. What’s up with that?
Thank you, Wall Street.
Not that we’ve forgotten. But speculation is still the Street’s bottom line. Money is flowing — not seeping — into oil markets. Investors are betting that the U.S. and foreign economies, notably China, are about ready to return to more familiar growth modes. That means, among other things, more oil demand.
It also means that energy prices continue to rise, even as unemployment remains disturbingly high and construction spending discouragingly low.
What’s not surprising is that no one is really surprised.