Following months of struggle for survival at the international market, there are now signs of a stronger outlook for the prices of crude oil. Prices had fallen by 70 per cent within the last 20 months. The good news is that between Monday March 1st and Thursday 3rd 2016, oil prices soared by three per cent and this was shortly after China moved to boost its economy, a drop in crude output from Organisation of Petroleum Exporting Countries, OPEC and the U.S., combined with a promise by Saudi Arabia to limit market volatility.
U.S. government data revealed that oil demand rose for the first time since August, suggesting that the countrys crude market may have passed its worst point. Experts say crude prices should start climbing higher, according to Director of JBC Energy Asia, Richard Gorry who enthused that The latest EIA data on U.S. production is also supportive as it indicates that the low prices are finally having an impact. U.S. shale producers cut oilrigs for a 10th week in a row to the lowest levels since December 2009. That is why analysts believe that the trend will lead to a production fall of 600,000 barrels per day this year.
Gorry told Reuters that The US crude market seems to have passed the worst point and crude runs should start creeping higher taking pressure off inventory levels. The latest EIA data on US production is also supportive as it indicates that the low prices are finally having an impact, saying, that the downside risk remains, due to the huge excess in production and stored supplies, which are at historic highs in the US.
Crude futures also, rose within the week after gaining over 15 per cent the previous week, there are also signs showing the likelihood that the market could gain strength. Brent futures LCOc1 had climbed almost half a dollar, or 1.2 per cent, from their previous close to $35.51 a barrel by 0425 GMT Monday. U.S. West Texas Intermediate (WTI) crude futures CLc1 went up 16 cents to $32.94 per barrel after gaining about 15 per cent on the past week recovering from January lowest trading of $27.
According to Morgan Stanley, a potential Russian-Saudi agreement to freeze output at January levels could be one of the sources of strength for the crude. Russia said production freeze agreement discussions should end on March 1st 2016 and any news of progression could drive headlines and prices, the Bank said.There are also reports that international benchmark Brent crude had spent over seven days above $35 per barrel all through the week.
” Market has suddenly started to focus on bullish headlines. This has created huge inflows, buying from hedge funds,” the managing director of crude at Strong Petroleum, Oystein Berentsen said in an interview.

Folashade Olubayo
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