Weekend Economists Silent Night Christmas Eve 2014

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37. Oil Slides as U.S. Supplies Jump Most in Two Months

http://www.bloomberg.com/news/2014-12-23/oil-trades-near-57-after-rebounding-on-u-s-economic-growth.html

Oil dropped as a government report showed U.S. crude inventories increased the most in two months.

West Texas Intermediate fell 2.2 percent in New York while Brent slipped 2.4 percent in London. Stockpiles climbed 7.27 million barrels in the week ended Dec. 19 as imports surged, the Energy Information Administration said. The report was projected to show a 2.5 million-barrel decline, according to the median estimate in a Bloomberg survey of nine analysts. Gasoline supplies advanced to a seasonal record.

“This report provides us with a very consistent picture that we’ve got supply outpacing demand and inventories are piling up,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “There’s too much crude coming in. Refineries are operating at a high rate but not high enough to make a dent in this.”

Futures surged yesterday after Commerce Department data showed that the U.S. gross domestic product rose at a 5 percent annual rate from July through September, the most since 2003. Oil is heading for the biggest annual drop since 2008 amid a global glut exacerbated by the highest U.S. output in more than three decades. Prices have dropped about 20 percent since the Organization of Petroleum Exporting Countries decided Nov. 27 to maintain its output ceiling at 30 million barrels a day.