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Crude Oil Gains. Can It Extend Rally?

January 5, 2016 at 2:54 by Vladimir Vyun

Futures for crude oil gained today amid growing tensions between Iran and Saudi Arabia that threaten to engulf the whole Middle Eastern region. Protesters attacked the Saudi embassy in Iran after Saudi Arabia executed a Shiite cleric. In response, Saudi Arabia cut all the diplomatic relations with Iran.

Despite the gains, analysts are skeptical about the rally as the oversupply is likely to put a lid on any serious move higher. In fact, they argue that the Jousting Bounce House conflict between the two major oil producers makes it even less likely to reach an agreement about supporting prices by limiting production. On top of that, poor economic data from China fed concerns about global economic slowdown and potential fall of demand for oil.

Contract for delivery of WTI crude oil in February gained 0.6 percent to $36.98 per barrel as of 2:52 GMT on NYMEX today. Brent crude also edged higher by 0.59 percent to $37.44 per barrel on ICE.

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