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Market Updates

Crude Oil had a particularly bad start to the year going from its open on January 4th at $38.34 per barrel to its most recent low of $27.70 in the first three weeks. It has since turned the bear trend around, at least for now as it at $38.52. The market, however, has still not changed completely, and most analysts are waiting for further evidence before calling it a new bull trend.

The price of Oil has been helped over the past weeks as Stock markets in the US and Europe have shown signs of recovery. The S&P 500 has gained 8.2% over the since February 11th, which also coincided with a strong rally in Oil price as it moved from a low of $28.36 to its most recent high at $39.70. Oil production from the US has also been on the decline since October 2014 when there were 1,931 Gas & Oil fields combined. The rig count has been decreasing as it follows the downward movement of Oil price. As of March 4th, another 13 Gas & Oil rigs have been closed, sending the total count to 489. Oil rigs saw a reduction of 8 to bring total oil rigs down to 392, the lowest level since 2009.

Such a drastic reduction in production capability has also been offset in some ways by reduced demand especially from some developing countries, like China and Brazil. Another factor keeping Oil supply plentiful is Iranian Crude is available and being exported across the globe. Iran’s Crude Oil production is forecast to increase to 3.1 million barrels per day, from 2.8 million pre-sanction production. It is expected to increase further in 2017 to 3.6 million barrels per day.

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