Crude oil prices up

At the end of the reporting year, a barrel of Brent Crude was US$107.55 (previous year: US$94.70). The annual average price of oil was around US$111, some 39% higher than in the prior year (approximately US$80). Over the course of the year the price of oil fluctuated significantly between US$93 and US$127. At the beginning of the year, it saw a sharp increase based on the robust global economy and the wave of protests in northern Africa, which also swept Libya, an important oil-producing country. As the economy cooled, the price decreased again. In addition, the oil supply continued to increase because the OPEC members exceeded their production quotas.

A very volatile euro

The European Central Bank (ECB) raised its key interest rate in two phases in April and July by a total of 0.5 percentage points to 1.5% in an effort to combat rising inflation. However, the rate was reduced in November and then again in December to 1.0%, due to higher economic risks. By contrast, the US Federal Reserve maintained its very expansive monetary policy, indicating that it intends to keep its key interest rate between 0% and 0.25% until well into 2014 as long as unemployment remains high and inflation does not increase.

The development of both the euro and the US dollar was shaped by the ever-changing economic outlook and the national debt crisis. The strong growth in the euro zone and the first increase in the ECB’s key interest rate early on caused the euro to rise considerably to its 2011 high of just under US$1.49 in May. Uncertainty regarding the solvency of some EMU countries, fears of recession and a return to expansive monetary policy at the ECB led to a strong downwards trend in the second half of the year. The euro ended the year at over US$1.29, a 3.2% decrease compared with the prior year. Measured against the pound sterling, the euro posted a 2.5% loss.