Oil prices rose above $48 a barrel on Tuesday as investors took advantage of a two-day slide in crude following Britain’s vote to leave the European Union to lock in lower prices.
The vote result sent global stocks and currencies spiralling down, though oil price losses were relatively limited due to expectations of strong summer demand in Asia and the United States, as well as tightening supplies after a two-year rout.
A looming strike at several Norwegian oil and gas fields threatened to cut output in western Europe’s biggest producer, also helped support prices on Tuesday.
Brent crude futures were 2.3 percent, or $1.08, higher at $48.24 per barrel at 0836 GMT.
U.S. West Texas Intermediate (WTI) futures were also 2.3 percent higher, up $1.06 at $47.39 a barrel.
Sterling and London’s FTSE 100 stock market index also recovered sharply on hopes of a coordinated central bank response to financial market losses. [MKT/GLOB]
“Oil is recovering on some bargain hunting after the drop below $47 a barrel proved unsustainable and news of a possible strike in Norwegian oil and gas industry,” said Commerzbank analyst Carsten Fritsch.
He also said the turmoil in Europe was not expected to have a “meaningful impact on the physical global supply and demand balances”.
Oil fell more than 7 percent to seven-week lows in the previous two sessions on the back of the British vote to leave the EU, which reduced investor appetite for volatile commodities such as oil.
A strike in Norway, which could start this Saturday, would add to a number of production outages in oil producing countries including Nigeria and Libya in recent weeks.
Still, news a successful ceasefire in Nigeria had allowed repairs to oil pipelines that had restricted the country’s ability to export oil weighed on market, ANZ Bank said.
Oil production in Nigeria has risen to about 1.9 million barrels per day from 1.6 million (bpd) due to repairs and to the fact there has not been a major pipeline attack for more than a week, a state oil company spokesman said on Monday.
Source: Reuters
