Global oil benchmark, Brent crude, traded
sharply lower on Monday, extending its
declines following Britain’s vote to exit the
European Union on Thursday.
The dip in the oil price comes as investors
were worried about global energy demand
and shunned assets perceived as risky in
the aftermath of the Brexit decision.
Brent, against which Nigeria’s oil is priced,
had hit the $50 per barrel mark for the
first time in 2016 on May 26 and was as
high as $53 per barrel few days after
before dropping to $49 on June 13.
It stood at $46.31 as of 8.05pm on
Monday, weighed by a rallying dollar and
continued market uncertainty over Brexit.
Brent and US crude futures have lost
about seven per cent since Thursday’s
settlement after the so-called Brexit vote
sent global risk assets plummeting on
Friday as investors fled to safe havens such
as the dollar, United States Treasuries and
gold, according to Reuters .
Analysts at Goldman Sachs and other
research houses sought to allay fears over
the impact of the EU crisis on oil
specifically, pointing out that Britain’s
demand for fuel was negligible at the
Oil prices rose slightly early on Monday on
some of that sentiment, before slipping
again. Market intelligence firm, Genscape’s
report of a draw of more than 1.3 million
barrels at the Cushing, Oklahoma, delivery
point for US crude futures provided little
The dollar was up almost one per cent,
near Friday’s three-month high, making oil
and other commodities priced in the
greenback less attractive to holders of the
euro and other currencies.
“We feel that a market shock such as
Brexit can often induce enough chart
damage to force a major long liquidation
phase,” Jim Ritterbusch of Chicago-based
oil market consultancy, Ritterbusch &
Associates, was quoted to have said.