Economic Pessimism Assumes Continued High Oil Prices, Which Is A False Assumption

I don’t understand some of the recent market pessimism.

Yes, May’s economic data will probably be bad, in part due to high oil prices. But oil prices have come down substantially from their highs last month ($98.92 per barrel or so right now) — the spike in oil prices was arguably caused by Mideast chaos/revolt fears, and of course Libya. Both of which are temporary issues, rather than permanent forces.

And with Saudi Arabia’s recent pledge to boost production in defiance of OPEC, which it reportedly has already begun to do, it’s hard to see oil prices even staying as high as $98 for long. The Saudis are planning to produce 10 million barrels per day in July.

Hello, cheap oil (for a while anyway).

Assuming the government actually raises the debt ceiling — a big assumption, given how obstinate and supremely incompetent this Congress has been — I see no reason why the U.S. economy shouldn’t do all right this summer.

— provided by Outlaw

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