Brexit fears and production highs crushed the oil market
Oil is getting volatile again.
The price of oil fell heavily in overnight trading on Tuesday as Brexit worries, combined with indications that output by the Organization of the Petroleum Exporting Countries (OPEC) hit a record high in June, weighed on the market.
Brent crude lost 4.3% and then steadied at just over $47 a barrel, while West Texas Intermediate was flat at $46.61, having slid 5% overnight.
Here is the Brent chart:
Investor concerns about the impact of Britain's decision to leave the European Union on global trade and growth dragged down markets on Tuesday, and oil was no exception.
The market was also hit by higher than expected production figures. According to OPEC, the oil producing cartel, production of crude oil increased by 240,000 barrels a day in June to 32.88 million. The glut was boosted by Nigeria, which pumped an average 1.53 million barrels a day last month, a gain of 90,000 a day from May, according to a Bloomberg survey.
Meanwhile, production in Saudi Arabia, the world's biggest crude oil producer, gained 70,000 barrels a day to 10.33 million barrels a day. According to Bloomberg, Saudi Arabia boosts output in summer to fuel air conditioners and protect against the heat.
Both Barclays and JPMorgan warned clients in notes this week that uncertainty around global growth would hit already shaky demand for the black stuff.
Analysts said concerns over the global economy were weighing on the outlook for oil demand and on prices.
"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," Barclays said in a note to clients.