Weekend Economists Ring in the New! New Year 2015

[Demeter]

13. Oil ends on a low after halving in 2014 as OPEC stands aside

http://www.reuters.com/article/2014/12/31/us-markets-oil-idUSKBN0K905620141231?feedType=RSS&feedName=topNews

Oil prices fell on Wednesday to a 5-1/2-year low and ended with their second-biggest annual decline ever, down by half since June under pressure from a global glut of crude. Just before the close, Brent and U.S. oil futures bounced off session lows. But prices still settled at their lowest since May 2009. Weekly U.S. data showed crude oil stockpiles fell more than expected, but inventories at the oil hub at Cushing, Oklahoma, grew, keeping prices depressed....

U.S. crude closed with its second-largest annual decline on record. The biggest came in 2008, when prices collapsed in the wake of the financial crisis. The last round of OPEC output cuts eventually brought them off lows near $30 a barrel. In contrast, OPEC at a Nov. 27 meeting this year decided against cutting output. Despite its own forecasts of a growing surplus, the group opted to defend its market share against shale oil and other rival supply sources.

Turmoil in Libya dented OPEC supply in December to a six-month low, a Reuters survey showed, although forecasts still point to a glut. The EIA reported a weekly drawdown U.S. crude inventory, along with small increases in demand for gasoline and heating oil and a rise in stocks for gasoline and distillate.

Oil prices came under further pressure from a survey showing China's factory sector shrank in December for the first time in seven months. This should hurt energy demand in the world's No. 2 consumer.