Oil extends biggest yearly slump since 2008 amid glut

The U.S. benchmark ended at a five-year low today, capping a 46 percent drop in 2014, as stockpiles of crude oil and gasoline reached seasonal record highs and as OPEC produced more than its quota in December for a seventh month. Goldman Sachs Group Inc. (GS) said it expects a "far lower" new normal for prices and Barclays Plc (BARC) said oil has "further downside risk." Oil's slump has roiled markets from the Russian ruble to the Nigerian naira and squeezed government budgets in producing nations including Venezuela and Ecuador. It's also boosted China's emergency crude reserves and helped shrink fuel subsidies in India and Indonesia. U.S. drivers may save as much as $75 billion at gasoline pumps next year, AAA said. Low prices have prompted producers including ConocoPhillips and Continental Resources Inc. (CLR) to plan spending cuts for 2015, Bloomberg reports. "The feature of the year is clearly the increase in production in North America," said Michael Hiley, head of energy OTC at LPS Partners Inc. in New York. "It's finally got to the tipping point where increases in production overwhelm demand. It's having a very negative impact on the Russian economy as well as Iran, Venezuela. But clearly it's a long-term good for the world economy."