NEW YORK, June 15 (UPI) -- Pessimism about the strength of the oil market recovery and concerns over the consequences of the so-called Brexit strategy dragged oil prices lower Wednesday.
Short-term supply disruptions triggered by wildfires in Canada and rebel attacks on oil installations in Nigeria, a member of the Organization of Petroleum Exporting Countries, weighed on market dynamics as demand for petroleum products spiked in part because of lower fuel costs. With markets already balancing on the back of modest global economic growth, the price for crude oil last week topped $50 per barrel for the first time in nearly a year.
"The rationalization of the oil market's surplus remains nascent at best," the bank said. "Canadian production is finally restarting, production from other OPEC members continues to beat our expectation and the recent recovery in prices creates risk that non-OPEC production declines less than we expect, especially in the United States."
Last week, oil field services company Baker Hughes reported a net gain in North American rig activity, a metric that indicates the price is oil is bringing some operators back to shale basins in the United States.
Oil markets, already on the decline after OPEC reports the balance between supply and demand was unchanged month-to-month, weakened further early Wednesday. The price for Brent crude oil moved lower by 1.8 percent to open at $48.91 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was off from the previous close by 1.4 percent to start trading in New York at $47.80 per barrel.
Goldman said some of the recent draws on crude oil inventories could reverse by the third quarter and push prices lower. Goldman tends to be bullish, with a researcher there warning in January that crude oil prices could possible drop below $20 per barrel in 2016. The low point for the year was in the upper $20 range.
Crude oil prices are moving in parallel to global stock indices as investors look for safe haven ahead of the British vote on its membership in the European Union. A report from the Economist Intelligence Union, a policy center associated The Economist magazine, found the British currency would fall by more than 10 percent against the U.S. dollar if the country leaves the EU. If it leaves, the economy would be "plunged into uncertainty," the report warned.