NEW YORK – Oil prices rose Tuesday, benefitting from the same bounce that lifted equity markets which had been sagging since Britain’s surprise decision to leave the European Union, AFP reports. Thursday’s Brexit vote not only sent worldwide financial markets skidding, oil prices also retreated and the British pound plunged to a 30-year low.
But analysts have been expecting a reversal of those trends at some point. “After the bloodletting across energy commodities, equities and various currencies in recent days, today is the day we have a relief rally, with markets seeing an inevitable rebound,” said analyst Matt Smith of ClipperData.
“There were outsized reactions in all capital markets following the surprising Brexit vote,” said Briefing.com analyst Patrick O’Hare. “There is a budding belief at this juncture, then, that things got overdone on a short-term basis, so there is some bargain-hunting activity taking place in oversold markets and some profit-taking occurring in overbought markets.”
US benchmark West Texas Intermediate for August delivery gained $1.52 to $47.85 a barrel on the New York Mercantile Exchange. Brent North Sea oil for delivery in August gained $1.42 to $48.58 a barrel in London. Tuesday’s movements also ended the dollar’s streak of gains in the wake of Brexit. A weaker dollar boosts demand for oil, which is sold in the US currency on international markets.
Analysts said the oil market was boosted by worries about a potential strike in Norway’s oil industry, which could affect just under 20 percent of the Scandinavian country’s oil production.