Market Comments: As of November 2014
North American oil production has been booming since the economic recovery began, and this added supply looks to finally be showing up in the form of lower prices. Benchmark WTI Crude Oil had traded in the $90 – $100 range for the first three quarters of the year but after a sharp decline in November, settled at just under $66 a barrel. Beyond increased North American output, slowing growth in emerging markets and the Eurozone has reduced demand, and an OPEC decision not to decrease production removed a price support level. Lower oil prices act as a global deflationary force, and with inflation already running below developed world central bank targets, monetary policy may have more flexibility to remain accommodative. Bond yields moved lower in response to decreasing inflation expectations. One large benefit of cheaper oil is lower gas prices at the pump, which will help out consumers. Stocks generally performed well during the month, except for the energy sector which fell along with oil prices. The S&P 500 gained 2.69%, and the international MSCI EAFE was up 1.36%.