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Oil falls below $50 on economic concerns

Published 05/07/2016, 11:55
© Reuters. Petrol pump nozzles are pictured at fuel station of M10-Oil company in Tver
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By Alex Lawler

LONDON (Reuters) - Oil fell below $50 a barrel on Tuesday as concern about a potential slowdown in economic growth that would sap demand trumped supply outages in Nigeria and other exporting nations.

Trade in one of Britain's largest property funds was suspended in a sign of financial stress following the country's vote to leave the EU. A flurry of data from China in coming weeks is expected to show weakness in trade and investment.

Brent crude (LCOc1) was down 99 cents at $49.11 a barrel at 1039 GMT. The global benchmark is still up more than 80 percent from a 12-year low close to $27 reached in January. U.S. crude was down $1.15 at $47.84 a barrel.

"Asia has been relatively weak and China is not providing much support," said Olivier Jakob, oil analyst at Petromatrix, who also said weak refined products were pressuring crude.

"Without the support of the products and with a structure in crude oil that is weakening, it is difficult to think that crude can break away to the upside."

British bank Barclays (LON:BARC) said concern over the global economy was weighing.

"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-lacklustre industrial demand growth trends," the bank said in a report.

The forthcoming Chinese data is also expected to show sluggish industrial output and another drop in foreign reserves, reinforcing views that Beijing will roll out more economic support measures.

Oil has gained support this year from signs that a supply glut that has halved oil prices in the last two years is easing and from unplanned outages from Canada to Nigeria.

The energy minister of Saudi Arabia, the world's largest oil exporter, and the incoming secretary-general of OPEC agree that the market is heading towards balance, the Saudi state news agency reported on Monday.

A partial recovery in Nigeria contributed to a rise in OPEC output last month, a Reuters survey found last week, but the rebound may be short-lived. [OPEC/O]

© Reuters. Petrol pump nozzles are pictured at fuel station of M10-Oil company in Tver

A Nigerian militant group that has been carrying out attacks on the country's oil installations said on Tuesday it blew up a well and two pipelines, having claimed responsibility on Sunday for five other attacks.

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