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Oil rally continues into Monday

Spike in prices comes amid concerns that Japan's economy will shrink next year.

By Daniel J. Graeber
Oil rally continues into Monday
Rally in crude oil prices continues as concerns fade over the outcome of the so-called Brexit strategy. Brent moves back above $50 per barrel. File photo by Monika Graff/UPI | License Photo

NEW YORK, June 20 (UPI) -- Crude oil prices shrugged off concerns about the health of the Japanese economy and lingering European woes to carry a streak into a second day Monday.

Crude oil prices shot up more than 4 percent Friday after oil field services company Baker Hughes showed recovery coming out of a North American energy sector battered by weakness that plagued most of the first quarter. More rigs in action can be seen as an expression of confidence about U.S. shale oil, which is seen as more costly than other basins.

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World stock indices had moved sharply lower last week amid concerns that a British referendum later this week would pull the country out of the European Union. Economists have warned both the British and European economies would be worse off if the referendum is successful. A survey of public opinion published by The (London Daily) Mail on Sunday found about 45 percent of the respondents wanted to stay in the EU, against 43 percent in opposition.

Oil moved higher for a second straight session early Monday, coming off a seven-day losing streak that ended Friday. The price for Brent was up 1.9 percent at the start of trading in New York to open the day at $50.11 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.9 percent to $48.90 per barrel early Monday.

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Crude oil prices have been holding at or near the $50 mark for several weeks as markets start to balance out. Oil was pulled higher by short-term outages in Canada, while summer demand for consumer fuels dragged on inventory levels.

On the economic front, a concluding statement on Japan from the International Monetary Fund found recessionary strains remain. Existing government goals for growth, inflation and the budget are all "out of reach," the IMF said.

Economic growth for Japan is expected at 0.5 percent this year, but it slows by 0.3 percent in 2017.

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For Europe, regional statistics show jobs were opening up for the 19 member states that use the euro currency, though productivity for the construction sector declined by 0.2 percent for the euro area.

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