Oil slips below $50 per barrel as global economic storm clouds gather
The oil price has dipped below $50 per barrel as investors fret over a potential slowdown in global economic growth.
It's feared that a global slowdown could result in a slackening in demand and recent supply outages in Nigeria and other exporting nations have not been enough to offset fears.
At pixel time Brent crude was down over a dollar at $48.89 a barrel. US Texas sweet was down $1.15 at $47.84 a barrel.
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The oil price has recovered some 80 per cent since crashing to lows of $27 per barrel in February on hopes demand will pick up in the second half of the year.
Doubts surrounding the health of the global economy have returned following the UK's vote to quit the European Union.
This morning the Bank of England slashed its capital requirements for UK banks, paving the way for an extra £150bn to be pumped into the UK economy, in its latest efforts to stop the UK spiralling into a post-referendum crisis.
The Bank also said it could already see signs the UK economy was on the verge of a dramatic slowdown in the aftermath of the vote.
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Meanwhile trade in one of Britain's largest property funds was suspended yesterday, highlighting the level of financial stress and uncertainty facing investors.
Just a short while ago Aviva followed suit, suspending dealing in one of its property funds.
Laith Khalaf, senior analyst at Hargreaves Lansdown said:
The dominos are starting to fall in the UK commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote. It’s probably only a matter of time before we see other funds follow suit.
The problem these funds face is that it takes time to sell commercial property to meet withdrawals, and the cash buffers built up by the managers have been eroded by investors heading for the door, both in the run up to the EU referendum, and in the aftermath.
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Traders are braced for data from China, the world's largest consumer of oil, to show weakness in trade and investment in coming weeks.
The oil price has slumped from highs of over $115 per barrel in the summer of 2014 due to a global supply glut caused by former oil cartel Opec's inability to agree on a supply ceiling.
The group has crumbled in the wake of increased shale oil production from non-Opec countries, predominantly the US and Russia.