Singapore | Oil prices rebounded with share markets in Asia Friday after a six-session sell-off with the dollar softening against most other currencies on easing concerns over Britain’s EU future. After yesterday’s sharp losses, equities pushed higher today on bargain-buying while analysts said the killing of a pro-EU lawmaker had increased the odds Britons will vote to stay in the European Union next week.
The shooting of Labour MP Jo Cox – by a man who reportedly shouted the name of a far-right, anti-EU group – forced the cancellation until the weekend of campaigning for the referendum. World markets have been in a tailspin for the past week as recent polling had indicated the exit camp would win the June 23 ballot. It’s evident that the rally is being entirely attributed to the belief that yesterday’s tragedy has increased the likelihood of the ‘Remain’ side holding sway in next week’s referendum, Ray Attrill, co-head of currency strategy at National Australia Bank in Sydney, said. All major markets in the region were solidly higher and the general easing of tensions over the British referendum saw traders move into riskier investments from the greenback, making oil cheaper for holders of other units.
At around 0930 IST West Texas Intermediate rose 35 cents, or 0.76 per cent, to USD 46.56, while Brent added 55 cents, or 1.17 per cent, to USD 47.74. By the close of trade yesterday WTI had plunged 10 per cent in six days from last week’s 11-month high, while Brent had given up nine per cent. The US dollar pared back slightly this morning and this has improved sentiment for oil, said Bernard Aw, Market Strategist for IG Markets Singapore.
However, with prices still around 80 per cent above February’s near 13-year lows, many firms are bringing mothballed rigs back online as they become more economically viable, which analysts said would reignite a global supply glut. A resumption of Canadian output after last month’s wildfires, and hopes for talks between the Nigerian government and rebels to stop attacks on installations, are also dampening prices. ‘With Canadian production returning, prices may have climbed as far as they could for now, Ric Spooner, a chief analyst at CMC Markets in Sydney, told Bloomberg News. It’s likely the correction will be shallower than it would have been earlier in the year because the market is seen as being closer to balance, he said.
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