Oil dipped below the $50 per barrel mark on Tuesday due to concerns over a possible slowdown in the economic growth that would weigh down supply outages across Nigeria and other nations that export.
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Oil prices tumbled almost five per cent on Tuesday as investors anxious that Britain’s exit from the European Union would slow the global economy, making it unlikely energy demand will grow enough to absorb a supply glut.
A flurry of new data will be soon released in China that is expected to show substantial weakness in both investment and trade.
The Brent crude benchmark price was US$49.68 a barrel on Friday, after falling 1.8%, but has been trading around US$50 a barrel since early May.
USA crude gained 83 cents, or 1.8 percent, to settle at $47.43.
Oil prices pushed higher in European trade on Monday, as market players monitored more disruption to supplies from Nigeria.
In the United States, drillers last week added oil rigs for a fourth week in five, in the best month of producers returning to the well pad since August 2016.
Crude prices extended gains on Monday in Asia, supported by comments from the Saudi energy minister saying the oil market is heading toward balance.
US drillers last week added oil rigs for a fourth week in five, according to a closely followed report Friday, in the best month of producers returning to the well pad since August that signaled a near-two year rout in drilling may have ended.
Although gasoline demand has remained close to record levels, but stocks have also continued to increase with over-production at refineries also an important influence. The effect, however, got negated as a recent survey conducted by Bloomberg showed that OPEC output rose by 240,000 barrels a day in June to 32.88 million.
USA oil prices have rallied from a 13-year low hit in February, due to supply outages in various parts of the world and a continued decline in US shale production.
Mohsen Ghamsari, the director for worldwide affairs at National Iranian Oil Company (NIOC), said the cargo was loaded at Iran’s Kharg Island last week.
Investors also awaited data on USA crude inventories, delayed due to Monday’s Independence Day holiday.
A stronger dollar also added to pressure on the commodity markets. Vessels carrying gasoline-making components could not unload at the harbour this week because of lack of space.
“You have to remember that sentiment in this market is still so fragile”, said Michael Tran, director of commodity strategy at RBC Capital Markets in NY.
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Several tanks with gasoline also have been diverted, underscoring the latest oversupply issue.
