Oil prices sag on British banker’s concerns

NEW YORK, July 18 (UPI) — Crude oil prices turned sharply lower in Monday trading after a British bank leader said uncertainty surrounding the exit from the EU would affect demand.

Major economic indices are still factoring in the June decision to leave the European Union. In his final speech as a member of the Bank of England’s monetary policy committee, Martin Weael said that, while the so-called Brexit is unlikely to have a pronounced impact on the global economy, there is still a high level of uncertainty.

“There is good evidence that uncertainty affects demand,” he said in his prepared remarks.

Crude oil prices have waxed and waned dramatically in the wake of the British decision in June, rallying Friday on militant threats to supplies in Nigeria, a member of the Organization of Petroleum Exporting Countries.

The price for Brent, the global benchmark based on North Sea oil, lost 1.7 percent at the start of the trading day in New York to open at $46.78 per barrel. West Texas Intermediate, the U.S. benchmark for oil, was down 1.7 percent to start the session at $45.15 per barrel.

Oil prices have held in the mid- to upper-$40 range since the middle part of May as markets start to show some level of balance, though perhaps fleeting, between supply and demand. Consumer demand for fuels is approaching a record in part because retail prices are lower, but in the United States in particular, gasoline production is just short of an all-time high.

An increase in oil production, largely from onshore shale basins in the United States, helped push crude oil markets sharply toward the supply side, erasing more than $50 per barrel over the last two years. Price stability in mid-2016 may be stimulating industry confidence, however. Baker Hughes last week reported an increase in U.S. rig activity for the third week in a row.