Commodities Head for Record Losing Run on Weak Oil and Strong Dollar
From the Desk of Jim Eccleston at Eccleston Law Offices:
According to Bloomberg News, with weaker oil price and a stronger dollar worldwide, commodities are facing the biggest annual loss since the global financial crisis in 2008.
Energy prices fell in 2014 as a jump in U.S. drilling sparked an energy output and price war with OPEC. OPEC chose to maintain supplies, rather than reduce supplies, in order to try to retain their market share.
The dollar climbed to its highest level in more than five years as a U.S. recovery spurred speculation that the Federal Reserve would start to raise borrowing costs in 2015.
Commodities are set for a volatile year in 2015, with crude oil likely extending its slump.
Already, Brent for is trading 49% lower this year. West Texas Intermediate dropped 2.7% to $52.65 a barrel on the New York Mercantile Exchange. Gasoline sank 49% this year.
In addition, a slowdown in China also hurt demand for raw materials as policy makers dealt with a property slowdown. And recent data showed a factory gauge at a seven-month low in December. The world’s biggest user of metals is headed for its slowest full-year economic expansion since 1990. China’s central bank cut interest rates last month for the first time since 2012.
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