Oil prices up in Asia but tremors over Brexit remain

SINGAPORE — World oil prices rebounded in Asia Tuesday on bargain hunting but tremors from Britain’s shock vote last week to leave the European Union continue to weigh on sentiment.

Financial markets are still reeling from Brexit’s fallout as investors sell riskier assets and flock to safe bets amid global economic uncertainty.

Asian stock markets resumed their losses early Tuesday, extending another sharp sell-off in Europe and New York.

At around 0330 GMT, US benchmark West Texas Intermediate for delivery in August was up 64 cents, or 1.38 percent, to $46.97 and Brent crude for August gained 60 cents, or 1.27 percent, to $47.76 a barrel.

Both contracts closed lower on Monday.

“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,” said IG Markets Singapore analyst Bernard Aw.

“The lack of guidance from the UK government and the prospects of a leadership struggle continued to dampen investors’ appetite, and this should persist through the week,” he told AFP.

British Prime Minister David Cameron quit in the wake of the vote and the race is on to find his successor as party leader who would take over as prime minister.

Former London mayor Boris Johnson and Interior Minister Theresa May are considered to be the front-runners in the leadership race.

Policy makers in Europe are trying to calm global markets but analysts said uncertainty remains.

“Apart from economic considerations, concerns are that the Brexit vote could encourage other EU countries to seek their own referendums, including Netherlands, France, Spain and Greece,” DBS Bank said in a note.

It said “this could potentially revisit the EU breakup fears that plagued the region” a few years back.

A strengthening US currency — considered a safe investment in times of turmoil — will likely continue to dampen demand for dollar-priced oil which would become more expensive for holders of weaker units, Aw added.

source: business.inquirer.net

Oil prices fall on China equity losses

LONDON - Oil fell on Monday as Chinese equities weakened, with a firmer dollar and global oversupply weighing on prices.

The U.S. Labor Day holiday helped keep trade thin.

China's main indexes closed down on Monday as investors sold shares in the aftermath of a four-day market holiday, during which further restrictions on futures trading were announced.

"Oil is only taking its cues from China this morning," SEB chief commodity analyst Bjarne Schieldrop said.

"The price is taking little notice of constructive data like stronger (European) equities, stronger base metals and last Friday's fall in U.S. rig count," he said.

Brent crude for October was down 75 cents at $48.86 a barrel by 1030 GMT. U.S. crude for October was down 70 cents at $45.35.

Oil has fallen almost 60 percent since June 2014 on a global supply glut. Prices have seesawed in recent weeks as concerns about a slowing Chinese economy caused turmoil in global stock markets.

"For commodities, the key demand-side figure to care about is not China’s GDP growing at 7 percent instead of 9 or 10 percent, it is the manufacturing price index, which has been falling for more than 40 months in a row," JBC Energy said.

A surprise gain in U.S. crude stocks of 4.7 million barrels in the week to Aug. 28, the biggest one-week rise since April, added to worries about oversupply.

That was despite the number of U.S. oil rigs falling by 13 to 662 last week, according to Baker Hughes data, the first decline in rig counts in seven weeks.

A firmer U.S. dollar also hurt oil prices by making the commodity more expensive for holders of other currencies.

The year-long decline in oil prices caused more than 5,000 job losses in Britain's North Sea oil and gas sector since late last year, the country's Oil and Gas Authority said on Monday.

Investors are awaiting euro zone second-quarter gross domestic product figures on Tuesday, followed by monthly global oil supply and demand data from U.S. and global energy authorities to give oil further direction.  — Reuters