Real Oil Price Jumps 9.0% in December

In real dollars, the price of oil averaged $97.64 in December 2013. This is the second month in a row that the real price of oil has fallen below $100. But, this is the seventh consecutive month that the oil price has been higher than it was one year ago. The rate of growth has slowed down slightly as it has been under 10% each of the last two months. The annual rate of change has grown faster each of the last two months. Annually, the real price of oil is growing at its fastest rate since June 2012.

Real consumer spending is a good leading indicator for the real oil price. Real consumer spending has been growing at a slightly decelerating rate since 2012. Historically, this pattern of growth in real consumer spending has indicated accelerating growth in oil prices. This is a positive sign for oil, gas field, and mining machinery production.