It was a short week, but it wasn’t quiet.
Oil prices moved higher, according to The Wall Street Journal, after the U.S.
Energy Information Administration reported crude-oil inventories fell unexpectedly
last year. Analysts had predicted oil supplies would rise.
One expert cited by The Wall Street Journal suggested the stockpile decline and
subsequent oil price rally owed much to Gulf Coast refiners reducing
inventories “to mitigate state ad valorem taxes on year-end crude stocks.” If
that’s the case, the oil price increase may not be sustained.
Regardless, improving oil prices gave U.S.
stock markets a boost. In particular, the Standard & Poor’s 500 Index
(S&P 500) benefitted from improving performance in the energy sector:
“Of 80 U.S. listed oil and gas producers, all
but one – a bankrupt company – rose on the day, with nearly half of the
companies up more than 10 percent. Energy shares were the biggest gainers Wednesday
in the S&P 500, up 3.8 percent and helped the S&P 500 on the whole gain
1.2 percent in late-afternoon trading.”
Barron’s reported energy stocks had gained 5 percent
for the week, but were still off by about 22 percent for the year.
The Organization of the Petroleum Exporting
Countries (OPEC) released its World Oil Outlook last week. BBC reported OPEC anticipates oil prices will begin to rise in
2016, although its producers’ share of the market is expected to shrink by 2020
as rival oil-producers proved to be more resilient in the face of low oil
prices than had been expected.
looking back… Each week, ‘The Economist
Explains’ blog expounds on subjects ranging from current events to economics,
from philosophical or scientific issues to everyday oddities. Let’s take a quick
look at a few of its headlines during 2015:
1.
Why the Swiss unpegged the Swiss franc (January 18, 2015). Remember when the Swiss
National Bank removed its currency peg last January? The Swiss franc realized
double-digit gains in value and the Swiss stock market dropped.
2.
Everything
you want to know about falling oil prices (March 18, 2015). “The main reason for
falling prices is increased supply from America thanks to its fracking boom,
which has reduced its demand for oil imports. Other countries, notably Saudi
Arabia, have been loth to curb supply lest they lose their share of the global
oil market.”
3.
Why so many Dutch people work part time (May 11, 2015). More than one-half of the
working population in Netherlands is employed part-time – a higher percentage
than anywhere else in the world. “This is partly a relic of prevailing
Christian attitudes which said that mothers should be home for tea time and
partly down to the wide availability of well-paid “first tier” part-time jobs.”
4. What
Greece must do to receive a new bail-out (July 14, 2015). After challenging negotiations, Greece and its
European creditors cut a deal, allowing the country to remain in the euro area.
5.
China’s botched
stock market rescue (July 30, 2015).
Chinese stocks lost nearly a third of their value last summer. China’s
authorities “resorted to heavy-handed measures to prop up swooning share
prices, from pressuring banks to buy stocks to blocking big investors from
selling theirs.”
6.
Why is the Nobel prize in chemistry given for
things that are not chemistry (October 7, 2015)? Apparently, five of the last 10 Nobel chemistry
prizes have been awarded for pursuits that might better be described as
biology. A possible explanation is “the diversity of chemistry prizes reflects
the fact that chemistry is found everywhere…”
7.
How the Fed will raise interest rates (December 14, 2015). Just as the Fed
employed unconventional monetary tools to stimulate the economy, it is using
new policy tools to try to increase the Fed funds rate.
We hope 2015 has been a memorable and rewarding year for you, and we
look forward to working with you in the New Year.
Weekly Focus – Think About It
“It is not enough to have a good mind; the main thing is to use it
well.”
--Rene Descartes, French philosopher,
mathematician, and scientist
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