November 2014 Flash Report

Against a backdrop of differential regional GDP growth and coordinated central banking policy actions, the most striking and pivotal event in November was OPEC’s decision not to change production levels. With advances in horizontal drilling and hydraulic fracturing materially expanding global oil supplies, the world’s oil price benchmark traded down to $70 per barrel (an almost 40% collapse since June). American consumers and the US economy are benefitting most from this near term oil price war confirmed by third quarter GDP growth of 3.9% driven in large part by increased consumer spending. Oil producing countries and currencies, however, are suffering as lower oil prices also pose deflationary challenges to the euro-zone and Japan.

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