The Oil Boom: Blessing and Curse - January 2015
Oil prices began the year 2015 with more slippage, against the backdrop of a stronger dollar and concern about a supply glut sending them to levels not seen since 2009. Their plunge was one of the top economic stories in 2014 and will doubtlessly remain a big theme for investors in the current year. Brent, the international marker, dropped almost 50% last year, the second-biggest annual loss since the 1980s. It fell below USD 56 a barrel late last week, weighed down by weak manufacturing data in China and Europe and news that output from some of the largest oil producers continues to rise.
Iraq, the second-largest producer in OPEC, said that December exports had hit their highest level since 1980, averaging 2.94 million barrels a day, while liftings in Russia, the largest exporter outside the cartel, also broke records. In the past, OPEC cut production in response to lower prices, but at their most recent meeting members decided to hold steady at 30 million bpd, keeping spigots open in what many market watchers view as a price war aimed at routing high-cost and shale producers. Saudi Arabia, the swing producer, went so far as to proclaim that it will not cut production regardless of the price, "be it USD 40, USD 30 or USD 20." READ MORE>>