On May 23^rd Crude Oil fell to a 7 month low amidst bad news from both developed and emerging markets. Oil has fallen below $90 following a series of steep declines since the beginning of May where Oil was traded at a high price of around $104. The New Year began with Crude oil being traded around the $100 mark and moved up during February after data began to show a positive outlook on the U.S economy. By March it had become apparent that the Euro Zone crisis is deeper than expected and the US economy has not been recovering as expected. The recent fall in prices this month owes to a worsening situation in the Euro Zone, but other factors such as possible successful talks with Iran has also contributed. The strengthening Dollar against major currencies has also been a factor.

On the supply side, the Department of Energy’s weekly report shows that supply has increased by 883,000 barrels to reach 382.5 million barrels. Relaxation of sanction on Iran will also add more oil into the market and might further depress prices. As of now, investors in Oil futures will need to closely watch the crisis in the Euro Zone. A Greek exit is most likely to depreciate the Euro further. In addition, the talks with Iran in Baghdad should also be closely monitored.