Commodities – Oil Dips on Econ Worries, as Producers Adapt to Lower Prices

Brent for September settlement gained as much as 55 cents, or 1.2 percent, to $46.95 a barrel on the London-based ICE Futures Europe exchange.

Rather than extend risk through more bets on oil, some fund managers are cutting exposure to prevent further losses as volatility rises again on concerns about supply and economic demand.

The latest data from Baker Hughes shows that United States drillers are increasing their rig count, with the number of rigs looking for oil rising to 351 in the week, a fifth consecutive rise in six weeks.

The oil market has been grappling with low prices since 2014, with the price of crude oil plunging nearly 60%.

Oil dropped after US producers increased the number of active rigs to the highest in 12 weeks, raising speculation output declines that have trimmed a global glut may slow.

Other factors affecting prices this week include the USA ramping up its rig count.

NEW YORK, United States-Oil prices fell on Monday as worries about global oversupply return to the fore and the dollar strengthened, making greenback-denominated crude more expensive.

The U.S. oil-rig count is typically viewed as a proxy for activity in the sector.

Despite this, vehicle sales climbed 14.6 percent to 2.1 million units in June compared with past year, according to the China Association of Automobile Manufacturers.

According to Barclays, Brexit will wipe out 100,000 barrels per day from global oil demand in 2016 and 2017. It seemed to correspond with a brief retreat in the dollar, which had shot higher overnight, originally setting oil on its push oil lower, analysts said.

Crude futures got a reprieve from session lows after Wall Street’s S&P 500 index hit a record high, reacting to a bullish USA monthly jobs report from Friday that boosted confidence in the economy. The connection has “been extreme here for the past month”, he said.

Despite Friday’s gains, London-traded Brent futures dropped $3.84, or 7.13%, on the week, its worst weekly performance since mid-January, amid growing anxiety over the economic impact of Britain’s vote to leave the European Union.

“Falling refining margins are prompting refiners to consider economical run cuts”, said Sri Paravaikkarasu, a senior consultant at energy analysts FGE.

At 3:34pm BST, Comex silver contract for September delivery was up 1.75% or 35 cents to $20.45 an ounce, bolstered by hedging demand, while the Comex gold contract for August delivery was up a mere 0.05% or 30 cents to $1,358.70 an ounce.

Kevin Baxter and Jenny W. Hsu contributed to this article.