Brent crude and West Texas Intermediate slumped today with Crude heading for the biggest annual decline since 2008 fuelled by a weakening global demand and a supply glut. Brent Crude fell 49% this year as the U.S. expanded output with its shale drillers and OPEC, responsible for 40% of the world's oil production, decided to maintain its output quota at 30 million barrels a day at a Nov. 27 meeting in Vienna in a fight for market share. According to Qatar's Energy Minister Mohammed Al Sada global markets are oversupplied by 2 million barrels a day.

Today prices came under further pressure as a survey showed China's factory sector shrank for the first time in seven months in December. China is the world second-largest consumer of oil.

Market participants are looking ahead to data on U.S. Crude oil Inventories later in the day at 15:30 GMT.

Brent Crude slumped -2.66%, currently trading at USD56.36 a barrel. West Texas Intermediate lost -1.64% currently quoted at USD53.23.

Gold is trading almost flat today slightly under the level of USD1,200. After yesterday's gains of +1.5% the price of precious metal is on the edge of a losing or winning year but is poised to end 2014 almost flat. Gold prices have been supported by the political turmoil in Greece, declining stock markets and a weaker U.S. dollar yesterday but a strong recovery in the U.S. economy and expectations of higher U.S. interest rates will contniue to weigh in the long run. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, however, remain weak. Yesterday holdings fell 0.21% to 710.81 tonnes, a six-year low.

Trading volumes are expected to be low this week which could lead to volatile and erratic markets. The precious metal is currently quoted at USD1,198.80, -001,% a troy ounce.

GOLD currently trading at USD1,198.80

REUTERS

Dollar top performer among major currencies in 2014

(Reuters) - The dollar was on track to end 2014 with a gain of 12 percent against a basket of major currencies, and anticipated U.S. interest rate hikes may strengthen its appeal in the new year.

This year's gain will be the dollar's largest since 2005, when it climbed nearly 13 percent.

The divergence between the U.S. Federal Reserve's path toward rate hikes and stimulative monetary policies in the euro zone and Japan has helped the dollar index hit an eight-year high this year, and is likely to remain a key theme in 2015.

Source: http://www.reuters.com/article/2014/12/31/us-markets-forex-idUSKBN0K903320141231

BLOOMBERG

ECB's Praet Warning of Oil Effects Signals Higher Chance of QE

European Central Bank Chief Economist Peter Praet warned in an interview with Boersen-Zeitung that lower oil prices increasingly risk de-anchoring inflation expectations, indicating that quantitative easing is becoming more likely.

Euro-area inflation will drop below zero "for a longer period" in 2015 amid a slide in the cost of crude, and the Governing Council "cannot simply look through" that, Praet said in comments published yesterday by the German newspaper. Inflation expectations are currently "extremely fragile" and the danger of second-round effects is "higher than usual," he was cited as saying.

Source: http://www.bloomberg.com/news/2014-12-30/praet-warning-of-second-round-effects-raises-qe-chances-for-ecb.html

BLOOMBERG

Oil Set for Biggest Slump Since 2008 as OPEC Battles U.S. Shale

Oil headed for the biggest annual decline since the 2008 global financial crisis as U.S. producers and the Organization of Petroleum Exporting Countries ceded no ground in their battle for market share amid a supply glut.

Futures slid as much as 1.4 percent in New York, bringing losses for 2014 to 46 percent. U.S. guidelines allowing overseas sales of ultralight oil without government approval may boost the country's export capacity and "throw a monkey wrench" into Saudi Arabia's plan to curb American output, according to Citigroup Inc. U.S. crude inventories are forecast to rise to the highest level for this time of the year in three decades.

Source: http://www.bloomberg.com/news/2014-12-31/oil-set-for-biggest-slump-since-2008-as-opec-battles-u-s-shale.html

(raw materials / closing price /% change)

Light Crude 53.60 -0.96%

Gold 1,202.30 +0.16%