Oil prices were trading above $48 a barrel Tuesday as investors looked to take advantage of the commodities slide in price since last week’s Brexit vote. Oil prices tumbled more than 7% in its last two sessions as investors sought cover in natural safe-haven assets like Gold.
August crude oil futures were nearly 2% higher in mid-morning trade, with U.S. West Texas Intermediate (WTI) futures seeing a jump near 2.5% as well.
Aside from bargain hunting, looming strikes at several Norwegian oil and gas fields also could be considered a catalyst for prices, as the strike’s would cut the output of western Europe’s largest producer. The strike could start on Saturday, and would add to recent oil-producing outages like those in Nigeria. Oil prices may have been even higher Tuesday if news of a successful ceasefire in Nigeria didn’t come about, as repairs to oil pipelines were able to be made.
A slightly weaker U.S. dollar certainly didn’t hurt the oil rally either, nor did the U.S. Commerce Department announcing that GDP numbers in the first quarter did not slow as much as previously estimated. There is some evidence of the U.S. economy regaining momentum, which could help oil prices moving forward, though the recent Brexit decision could be a negative weight in respect to that momentum.
Despite sending markets deep into the red in the past two days, the Brexit vote’s impact on oil prices has been limited due to expectations of strong summer demand from the U.S. and Asia as well as a tightening in supply after two years of excess amounts. If the Norwegian strikes due begin this weekend or in the near future, we could see oil increase closer to the $50 per barrel mark this summer. It will be something to watch as the usually volatile commodity is affected by global uncertainty in the coming months.