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Oil rises amid ease in Brexit concerns, production shortages

by June 28, 2016 General

June 29, 2016, 12:44 am TWN

LONDON — Oil prices rebounded Tuesday as bargain hunting and fear of production outages in Norway outweighed Brexit concerns, traders said.

While tremors from Britain’s shock vote last week to leave the European Union dampened buying sentiment, oil investors are now looking more to factors specific to their market for guidance, they said.

Top of the list is a looming strike in Norway’s oil industry, which could affect just under 20 percent of the Scandinavian country’s oil production.

“Today’s price rise is attributable first and foremost to possible production outages in Norway, where there is the threat of strikes in the oil and gas industry from the weekend,” oil analysts at Commerzbank said.

At around 1130 GMT, U.S. benchmark West Texas Intermediate rose US$1.08 to US$47.49, while Brent gained US$1.11 to US$48.88.

The pick-up in the black gold came in line with a recovery in stock markets as speculation swirls that authorities could unveil stimulus measures to offset the impact of the Brexit vote.

“The turmoil in the financial markets, triggered by the UK referendum results, is keeping the pressure on oil prices, which look set to clock a monthly loss in June,” IG Markets Singapore analyst Bernard Aw told AFP.

But Commerzbank said that the impact of Brexit on oil demand “should be limited,” while Olivier Jakob at Petromatrix called the oil market’s resilience in the face of the British vote “impressive.”

“Crude oil has not avoided a Brexit correction but we view that it has done relatively well in consideration of the collapse in equities and of the surge in the dollar,” he said.