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01.07.2016

Upstream Energy Sector Under Pressure for 2016

U.S. exploration and production companies are being challenged by the cyclical downturn in commodity prices which are expected to continue through 2016.  Energy’s upstream sector is directly impacted by oil commodity prices that are at lows not seen since 2009, reflecting the gradual decline in the trading markets.  Three mitigating factors that will determine the longevity of this cycle are: 1) OPEC countries’ stance in managing production; 2) lifting costs’ strain on productivity; and 3) recovery of the global demand for energy particularly in China.  With many U.S. upstream energy companies facing consequential economic circumstances, insurance companies are in the midst of a soft, competitive market.