Oil falls below $49 on economic jitters, ample supply
LONDON – Oil fell below $49 a barrel on Tuesday, pressured by concerns that a potential slowdown in economic growth could sap demand and by persistent signs of abundant supply despite another militant attack on Nigeria’s oil industry.
Worries about the economic impact of leaving the European Union hit Britain’s property market and drove the pound to a 31-year low. A flurry of data from China in the coming weeks is expected to show weakness in trade and investment.
Brent crude was down $1.19 at $48.91 a barrel at 1309 GMT. The global benchmark is still up more than 80 percent from a 12-year low close to $27 reached in January. U.S. crude was down $1.35 at $47.64 a barrel.
“Asia has been relatively weak and China is not providing much support,” said Olivier Jakob, oil analyst at Petromatrix, who also said weak refined products were pressuring crude.
“Without the support of the products and with a structure in crude oil that is weakening, it is difficult to think that crude can break away to the upside.”
British bank Barclays said concern over the global economy was weighing.
“The deterioration in the global economic outlook, financial market uncertainty and ripple effects on key areas of oil demand growth are likely to exacerbate already-lackluster industrial demand growth trends,” the bank said in a report.
Oil has gained support this year from the perception that a supply glut that has halved oil prices in the last two years may be easing, and from unplanned outages from Canada to Nigeria. But signs of ample supply of crude and products persist.
A partial recovery in Nigeria contributed to a rise in OPEC crude production last month, a Reuters survey found last week.
Several tankers carrying gasoline-making components have dropped anchor off New York harbor, unable to discharge as onshore tanks are full.
In Libya, where oil output has slowed to a trickle due to conflict, the National Oil Corporation has agreed to merge with its domestic rival, raising hopes the OPEC country could start to pump more.
“Further downward price pressure is expected as signs of an oversupplied global market refuse to go away,” said oil broker PVM, adding that “macroeconomic risk” was scaring buyers away.
Another attack in Nigeria had a limited impact on prices.
A militant group that has been attacking the country’s oil installations said on Tuesday it blew up a well and two pipelines, having claimed responsibility on Sunday for five other attacks. –Reuters