Riddle me this: The Middle East is in turmoil, Libya is burning, Russia is saber-rattling again — and oil is at a six-month low.
In fact, crude prices are down 10 percent since mid-June, when global tensions mushroomed.
Yes, oil continues to fall right smack in the middle of summer driving season.
It falls despite the US posting a respectable second-quarter GDP number.
It falls while Israel and Hamas are in an all-out war and the rest of the Middle East is burning and being taken over by violent Islamist extremists.
Well, here is one fact that we do know: During recessions and weak growth, energy prices do fall.
Look no further than during our own financial crisis; crude got down into the high $30s a barrel at the end of 2008.
Perhaps nobody is buying the first look at second-quarter GDP at 4 percent and are awaiting further downward revisions.
Another fact that we know is that Germany, which is Europe’s strongest engine, is no longer growing. It posted a contraction of .02 percent for its first quarter on Thursday, sparking fears of deflation throughout Europe.
There are other things indirectly affecting oil’s fall.
The shrinking of Wall Street’s commodity trading desks has probably been a factor, but as they are rather ambidextrous, who’s to say what side of the trade they’d be on?
The fracking boom has helped a bit. And there’s the Fed, which is “tapering” its QE program, but that’s a slippery call to make.
Here you need to look no further than retail sales — which were once again abysmal — or the falling 10-year Treasury yield, which got below 2.4 percent this week.
All signals of a weak economy.
While explosions in the Middle East have always led to “super-spikes” in energy prices, floundering economies around the globe have so far trumped fear and chaos.
Oil is sending a message that the economy has not yet gotten out of its own clear and present danger.