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July 4, 2016

Oil prices drop due to concerns of economic growth slowdown

Oil prices have fallen below $50 a barrel amid concerns of potential slowdown in economic growth, which is expected to weigh on supply outages in Nigeria, as well as other exporting countries.

By Srivani Venna

Oil prices have fallen below $50 a barrel amid concerns of potential slowdown in economic growth, which is expected to weigh on supply outages in Nigeria, as well as other exporting countries.

Brent crude slipped $1.04 at $49.06 a barrel, while the US crude dropped $1.28 at $47.71 a barrel, Reuters reported.

Following Britain’s vote to exit the European Union (EU), trading was suspended in one of the country’s largest property funds signalling a financial stress.

"Deterioration in the global economic outlook and financial market uncertainty are likely to exacerbate already-lacklustre industrial demand growth trends."

British bank Barclays told the news agency: "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."

Chinese data has yet to be released, yet is also expected to show sluggish industrial output and another fall in foreign reserves.

This year, oil prices gained support from signs that oversupply that has halved prices in the last two years is easing, as well as due to disruptions in Canada and Nigeria that cut production.

The Saudi state news agency reported that the country’s energy minister agreed that the market is set to balance.

A survey conducted by Reuters last week found that a partial recovery in Nigeria contributed to an increase in OPEC output last month.

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