The ending of QE in the US and the fall in the price of oil from over
$115 a barrel to under $60 a barrel were the defining economic events
of 2014, but their consequences will not be felt until next year. The ending of QE in the autumn brought to an
end the huge expansion of the US Federal Reserve’s balance sheet, since 2008
the Fed has pumped some $2.3tn of “new money” into the world economy which has
had a wondrous effect on asset prices in all sorts of weird and wonderful
places. London property prices have
boomed, stocks in emerging markets reached new heights and bond prices sky
rocketed as yields collapsed – also commodity prices boomed and oil was not
left out of the party. Between 2009 and
2011 oil prices rose from $40 to $125 a barrel, driven by ever increasing
demand from emerging markets and $1.9tn of US and UK QE. Following the boom in commodity prices between
2011 and 2013 prices stabilised at a high level before falling off a cliff in 2014.
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| The Crude Story |
