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Oil Prices Rise on Norway Strike Threat; Brexit Shock Fades

by Reuters / / Source: Reuters
Petrol pump nozzles are pictured at a fuel station owned by M10-Oil company in Tver, Russia, June 1, 2016. REUTERS/Maxim Zmeyev

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Oil rose early on Wednesday as financial traders poured money back into commodities following the initial shock of Britain's vote to leave the European Union, and as a potential strike in Norway and crisis in Venezuela threatened to cut supply.

International Brent crude futures were trading at $48.76 per barrel Wednesday morning, up 18 cents from their last settlement. U.S. West Texas Intermediate crude was up 30 cents at $48.15 a barrel.

Petrol pump nozzles are pictured at a fuel station owned by M10-Oil company in Tver, Russia, June 1, 2016. REUTERS/Maxim Zmeyev

Both crude oil benchmarks had climbed on Tuesday after financial markets shook off some of the shock of last week's referendum in Britain in which most voters elected to exit the EU, triggering turmoil across markets and regions.

"The risk-on tone should see commodities continue to push higher," ANZ Bank said on Wednesday.

"Oil led the (commodities) sector as the shock of the UK voting to leave the EU wore off. Oil gains were solidified by news that the decline in Venezuela's oil output appears to be accelerating, while a strike in Norway also looked like it would impact production," it added.

Prices were also supported by supply fundamentals, as a looming strike by Norwegian oil and gas field workers threatened to cut output from the biggest North Sea producer.

Reports that oil producers and refiners in crisis-struck Venezuela were struggling to keep output up due to power outages and equipment shortages also supported prices, traders said.

Additionally, the American Petroleum Institute (API) indicated in a preliminary report on Tuesday that crude inventories could have fallen nearly 4 million barrels for the week to June 24, some two-thirds more than the 2.4 million barrels expected by analysts.

The U.S. Energy Information Administration will issue official stockpile data on Wednesday.

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