On January 10, 2014, the monthly jobs data for the United States was made public, showing that there was a decrease in hiring. In fact, only seventy four thousand jobs were added across the nation in the last month. The effect on the oil industry was palpable and immediately felt as the crude oil prices jumped over ninety three dollars a gallon for the first time this year. However, this number is down from the yearly high that was marked back in December 2013, when crude oil prices were over one hundred dollars per gallon.
Due to the unusually cold winter, the prices for crude byproducts have gained steadily and not experienced the expected fluctuations from the jobs market. For investors in the crude oil industry, this jobs report will result in a weaker buying power for the dollar over foreign currencies, effectively limiting the amount of crude that is expected to be traded this month.
Another negative aspect of the crude oil trade that is going to have a serious effect within the United States this year is the federal government presence leaving the trade. For the past four years the federal government has been purchasing billions of dollars in bonds to add to the economic stimulus, effectively regulating interest rates for the crude oil as well as the commodities market.
Starting this year the Federal Reserve will decrease their spending by $10 billion a month in order to reflect the modest gains made in the United States economic recovery. The result will be higher interest rates and possibly less investor support overall.
The effects of these moves are being felt outside of the United States as well, but there are more positive results for investors. The demand for oil and refined oil products has remained high, and there is a large supply of crude flowing in from the Middle East. This news comes on the heels of renewed instability in the region, which has caused some investors to proceed cautiously through the first month of the year.
Specifically, Libya, which had an output of one and a half million barrels of oil each day, has proved troublesome for the oil market. As of right now, they only produce a fraction of the oil that they did three years ago under the ousted Muammar Gadhafi. The political instability combined with an uneven desire to sell their oil reserves to the west has led many in the OPEC nations to seriously consider the exclusion of Libya from their extended allies.
Overall, the expected results of this news is high supply and high supply, with a steadily rising undercurrent of interest prices due to the withdrawal of federal government bonds in the market.