Tag Archives: Oil Prices

Oil prices fall back from one year highs hit by OPEC deal concerns

A worker checks the valve of an oil pipe at an oil field owned by Russian state-owned oil producer Bashneft near the village of Nikolo-Berezovka, northwest of Ufa, Bashkortostan, Russia

By Amanda Cooper

LONDON (Reuters) – Oil fell back from one-year highs on Tuesday, knocked by concerns that a production cut by the world’s largest exporters might not be enough to erode a two-year old global surplus of unwanted crude oil.

Oil prices jumped as much as 3 percent on Monday, after Russia and Saudi Arabia both said a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members like Russia in curbing crude output was possible.

December Brent crude oil futures were down 42 cents at $52.72 a barrel by 1100 GMT, below Monday’s one-year high at $53.73, but off an intraday low at $52.51, while U.S. futures were down 43 cents at $50.92 a barrel.

Global oil supply could fall into line more quickly with demand if OPEC and Russia agree to a steep enough cut in production, but it is unclear how rapidly this might happen, the International Energy Agency said on Tuesday.

“The word I look at is ‘if’,” Saxo Bank senior manager Ole Hansen said. “OPEC’s compliance (track record) with its own limits is not good.

“What it all adds up to is an increased belief that a firm bottom has been established, but as the market moves higher the risk of self-defeat rises as it opens the door right open for the return of production growth among high-cost producers,” he said.

Igor Sechin, Russia’s most influential oil executive and the head of the Kremlin’s industry champion Rosneft, said his company will not cut or freeze oil production as part of a possible agreement with OPEC.

“Underlying scepticism that global oil producers will succeed in taking coordinated action to support prices is therefore alive and well,” PVM Oil Associates analyst Stephen Brennock said in a note.

“Meanwhile, of those that do see a chance of a genuine output deal, they still need convincing that the proposed cuts will go far enough to address the supply imbalance.”

Goldman Sachs said in a note to clients on Tuesday that despite a production cut becoming a “greater possibility”, markets were unlikely to rebalance in 2017.

“Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017,” the U.S. bank said, and added that even if OPEC producers and Russia implemented strict cuts, higher prices would allow U.S. shale drillers to raise output.

Adding to the drag on oil, the dollar rallied to its highest in 11 weeks, lifted by rising expectations that the Federal Reserve could raise U.S. interest rates by the end of the year.

(Additional reporting by Henning Gloystein in Singapore; Editing by Louise Heavens, Greg Mahlich)

Oil prices slide as oversupply concerns weigh

Refinery workers walk inside the LyondellBasell oil refinery in Houston, Texas

By Ahmad Ghaddar

LONDON (Reuters) – Oil prices extended losses on Wednesday after falling by as much as 3 percent in the previous session amid concerns that rebalancing the global oil market will take longer than originally envisaged.

Prices had been supported earlier in the session by data from the American Petroleum Institute (API) which showed a crude build of 1.4 million barrels for the week ended Sept. 9, smaller than the 3.8-million-barrel rise expected by analysts.

The U.S. government will issue official inventory data later on Wednesday.

Brent crude futures were trading down 33 cents at $46.77 per barrel at 1244 GMT.

U.S. West Texas Intermediate futures were down 26 cents at $44.64 a barrel.

“Long suffering oil bulls will now turn nervously to the U.S. EIA’s commercial crude inventory numbers,” OANDA senior market analyst Jeffrey Halley said.

“It was an unexpected undershoot in these numbers last week that set off the rally in crude last week.”

Crude prices tumbled on Tuesday after the International Energy Agency (IEA) said slowing oil demand growth amid growing inventories and supplies could signal that the market will be oversupplied at least through the first half of 2017.

Commerzbank said in a note that the delay in rebalancing is largely due to a rise in production from members of the Organization of the Petroleum Exporting Countries and that the market would be balanced already if OPEC had maintained its production at May’s levels.

“Rather than talking about capping oil production as it was planning to do at the end of September, OPEC would be better advised to think about reversing the production growth of recent months,” Commerzbank analyst Carsten Fritsch said.

OPEC members are due to meet informally in Algeria this month on the sidelines of the International Energy Forum (IEF). Russia is also expected to attend the IEF.

The chairman of Libya’s National Oil Corporation visited the port of Zueitina on Wednesday and said he would work to lift force majeure there, according to the head of a guard force in control of the terminal.

NOC Chairman Mustafa Sanalla said Libyan production could be raised to 600,000 barrels per day (bpd) from about 290,000 bpd within a month.

(Additional reporting by Mark Tay in Singapore; editing by Susan Thomas and Jason Neely)

New Caspian oil fields to add to glutted global market

Oil rig and infrastructure of D Island are pictured at Kashagan offshore oil field in Caspian sea in western Kazakhstan

By Olga Yagova and Alla Afanasyeva

MOSCOW (Reuters) – Two new Caspian Sea oil fields are due by the end of this year to add significant volumes of crude to a world market already in glut, possibly depressing prices just as producers including Russia talk about reviving them.

According to industry sources and a loading schedule seen by Reuters, the Kashagan field in Kazakhstan’s sector and Lukoil’s Filanovsky field in the Russian sector – both of which are scheduled to come on stream soon – will together produce at least 200,000 barrels of crude per day (bpd) by the end of 2016.

By the end of next year, according to targets previously announced by the fields’ operators, Kashagan and Filanovsky will between them produce about 500,000 bpd, equivalent to about 0.5 percent of global production.

Faced with world oil prices languishing at around $50 per barrel, Saudi Arabia and Russia – the world’s two biggest crude exporters – agreed on Monday to cooperate in world oil markets. Though they will not act immediately, they said they could limit output in the future.

The agreement pushed up prices on expectations that exporters would work together to tackle the glut. However, on Thursday Brent crude <LCOc1> was trading around $48.50.

The Caspian crude will come on top of extra oil from Iran, which is working to raise its exports back to around 2.4 million bpd, the amount it used to sell before sanctions aimed at curbing its nuclear programme were imposed. International sanctions were lifted earlier this year on implementation of a deal between Tehran and world powers.

Production at the long-delayed and hugely expensive Kashagan offshore project – the world’s biggest oil find in 35 years – will start in October this year, according to industry sources who have seen Kazakh Energy Ministry documents on the field.

Output will initially be 75,000 bpd in October, rising to between 150,000 and 180,000 in the November-December period of this year, the sources told Reuters, citing the ministry documents.

Asked about the plan, a spokeswoman for North Caspian Oil Company, the Kashagan operator, declined to give a breakdown of production figures for this year.

The Kashagan consortium comprises China National Petroleum Corp., Exxon Mobil of the United States, Italy’s Eni, Anglo-Dutch Royal Dutch Shell, Total of France, Inpex of Japan and Kazakh firm KazMunaiGas.

The project began producing oil in September 2013 but stopped a few weeks later after gas leaks in its pipelines.

$55 BILLION INVESTMENT

Filanovsky will export around 50,000 bpd of CPC blend, a light Caspian crude, between October and December this year, according to a loading schedule, a copy of which was obtained by Reuters.

Representatives of Lukoil confirmed that production would start this year, but declined to give figures for volumes.

The planned new Caspian production from the two members of the Commonwealth of Independent States (CIS), which groups most ex-Soviet countries, shows how difficult it will be for exporters to curb output, especially when commercial interests outweigh the wishes of government officials.

The Kashagan field is five years behind schedule and costs have rocketed. By the end of 2015, the amount invested in its first phase had reached $55 billion, according to the project’s operator.

“While Russia is lulling the world with stories about a freeze in production in order to stabilise prices, on its territory and in the countries of the CIS new fields are continuing to come on stream and it doesn’t look like anyone can do anything to stop it,” said an industry source who spoke on condition of anonymity.

(Editing by Christian Lowe and David Stamp)

World Stocks hit one year high as Fed hike prospects fade

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany,

By Nigel Stephenson

LONDON (Reuters) – World stocks hit their highest in more than a year and the dollar fell sharply against the yen on Wednesday as expectations of a rise in Federal Reserve interest rates receded after weak U.S. economic data.

Emerging market shares led the charge, touching their strongest levels since July 2015 as investors sought yield with interest rates likely to stay low for a prolonged period.

But European shares dipped in early trade. The Stoxx 600 index  fell 0.2 percent led lower by banks, for whom rock-bottom interest rates promise tough times. The index nonetheless remained close to eight-month highs.

The top gainers in Europe were energy shares, up 0.7 percent, as oil prices rose, even though many market participants remained doubtful producers would reach a deal to freeze output.

Euro zone government bond yields fell as some investors bet the weak U.S. data, which followed weaker-than-expected jobs numbers on Friday, would pressure the European Central Bank to ease monetary policy further. Then ECB meets on Thursday.

“With a September rate hike looking less likely to happen, the ECB might be more pressured to come up with a decision this week on further measures,” said Benjamin Schroeder, senior rates strategist at ING.

In Asia, MSCI’s main Asia-Pacific stock index, excluding Japan was up 0.2 percent, having earlier touched its highest since July last year. This helped lift MSCI’s all-country world index to its highest since August 2015.

“When people think there’s no immediate rate hike from the Fed, then Asia and emerging markets are the place to go to, as investors seek yields,” said Toru Nishihama, senior economist at Dai-ichi Life Research.

Japan’s Nikkei index , however, retreated 0.4 percent as a strong yen hurt exporters.

DOLLAR, OIL

The dollar was last down 0.5 percent at 101.50 yen <JPY=>, having fallen as low as 101.18, its weakest since Aug. 16.

The dollar fell 1 percent against several major currencies on Tuesday after Institute for Supply Management data showing activity in the U.S. service sector slowed to a 6 1/2-year low in August and diminished already slim prospects for a Fed rate hike this month.

The dollar index, which measures the greenback against a basket of major currencies was flat. The euro was down 0.1 percent at $1.1245 while sterling, which topped $1.34 for the first time in seven weeks on Tuesday after the ISM data, pulled back 0.2 percent to $1.3412.

“Clearly, this is a challenging environment for the dollar,” said Petr Krpata, currency strategist at ING.

The Swedish crown rose around 0.2 percent to 9.52 per euro after the Swedish central bank kept interest rates unchanged, as expected.

Oil prices, which have been on a rollercoaster in recent days as expectations of whether a deal to curb a global glut can be reached have waxed and waned, edged up.

Brent crude, the international benchmark, gained 35 cents to $47.61 a barrel. It rose as high as $49.40 on Monday, having fallen to $45.32 on Sept. 1.

The reduced expectations of a Fed hike also lifted other commodities. Copper hit a two-week high at $4,683 a ton, while gold hit a 2 1/2-week peak above $1,352 an ounce before pulling back.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

Oil Prices rise on U.S. weather fears

View of gasoline pumps at a petrol station in Paris in Paris, France,

By Ahmad Ghaddar

LONDON (Reuters) – Oil futures rose on Tuesday supported by production suspensions in the U.S. Gulf due to an expected tropical storm and speculation that producers meeting in Algeria next month will act to prop up prices.

Brent crude futures were trading at $49.58 per barrel at 1358 GMT (0958 EDT), up 32 cents from the previous close.

U.S. West Texas Intermediate (WTI) crude was up 39 cents at $47.37 a barrel.

Oil and gas operators in the U.S. Gulf of Mexico have shut output equal to 168,334 barrels per day (bpd) of oil and 190 million cubic feet per day of natural gas as a precaution against a tropical storm, the U.S. Bureau of Safety and Environmental Enforcement said on Monday.

Shell said it had shut production at its Coulomb field in the region after BP shut its Na Kika platform ahead of Tropical Depression Nine.

Oil prices have also been taking direction from speculation that a meeting next month in Algeria of major producers, including members of the Organization of the Petroleum Exporting Countries, could yield a production deal to support prices.

“Prices are still finding support from the expectations of an agreement on production caps being reached at the late-September meeting,” Commerzbank said in a note.

Saudi Arabian Energy Minister Khalid Al-Falih told Reuters last week he does not believe an intervention in oil markets is necessary since the “market is moving in the right direction”.

Iraq – which exported more crude this month from its southern ports than in July – will continue ramping up output, its oil minister said on Saturday.

A Nigerian militant group has said it has ended attacks on the nation’s oil and gas industry that have reduced the OPEC member’s output by 700,000 barrels a day to 1.56 million bpd.

But the prospect of a recovery in oil production from Libya happening any time soon was tempered after the head of the country’s National Oil Corp. said budgetary delays from the new government were undermining oil production.

“Oil prices are caught between concerns about oversupply and a strong dollar on the one hand and the prospect of further jawboning from OPEC members that some form of production freeze could be on the cards,” CMC Markets senior analyst Michael Hewson said.

The huge global oil oversupply that has weighed on prices for the past two years may not clear until the second half of 2017, Shell’s chief energy adviser Wim Thomas told Reuters.

(Additional reporting by Roslan Khasawneh in Singapore; editing by Jon Boyle)

Oil rally under pressure; record Saudi output offsets U.S. drawdown

Oil field

By Barani Krishnan

NEW YORK (Reuters) – Oil’s near week-long rally was under pressure on Wednesday after an unexpected drawdown in U.S. crude and gasoline stocks was offset by worries that Saudi Arabia was cranking output to record highs even as OPEC talked of ways to ease a global glut.

U.S. West Texas Intermediate (WTI) crude futures <CLc1> were down 5 cents at $46.53 a barrel by 1:03 p.m. EDT (1703 GMT), after trading as much as 21 cents higher.

Brent crude futures <LCOc1> rose by 42 cents to $49.65 a barrel. It reached five-week highs of $49.75 earlier.

WTI’s discount to Brent <WTCLc1-LCOc1> widened to a six-month high, raising the export potential for U.S. crude.

Oil rallied about 11 percent over the past four sessions since Saudi Arabia, the kingpin in the Organization of the Petroleum Exporting Countries, stoked speculation the group was ready to reach an output freeze agreement with non-OPEC producers.

The markets briefly extended gains after the U.S. Energy Information Administration (EIA) said domestic crude inventories fell 2.5 million barrels last week, surprising analysts who had expected a build of 522,000 barrels. [EIA/S]

Gasoline stockpiles also fell 2.7 million barrels, more than expectations for a 1.6 million-barrel drop, the EIA data showed.

But the market’s upside was capped by a Reuters report that said Saudi Arabia could boost crude output in August to new records at 10.8-10.9 million bpd, overtaking Russia’s production, even as OPEC aims for a pact to curb global output.

The Saudis told OPEC they pumped 10.67 million bpd in July, versus their previous record of 10.56 million in June 2015. [OPEC/M]

Saudi-based industry sources said earlier in the year they expected the kingdom’s output to edge near record highs to meet summer demand for power. But they said it was unlikely that Saudi output will flood the market.

“One certain thing to be aware of is the Reuters report that Saudis may increase production to new record highs pushing near 11 million barrels per day,” said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in New York.

“With the U.S. rig count coming back online for several weeks, even if a freeze did happen we would be talking about freezing at higher levels of output,” Zahir said.

Before last week’s drawdown, U.S. crude stockpiles had risen unexpectedly in three previous weeks. The U.S. oil drilling rig count has also risen without pause for seven weeks, signaling more production ahead. [RIG/U]

Reports of refinery outages in the United States, including a crude unit at Exxon Mobil Corp’s <XOM.N> 502,500 barrel per day (bpd) plant at Baton Rouge in Louisiana, added to the market’s downside. [REF/OUT]

Traders will be on the lookout for a U.S. Federal Reserve statement due at 2:00 p.m. (1800 GMT) to gauge if interest rates are to rise soon.

(Additional reporting by Amanda Cooper in LONDON and Henning Gloystein in SINGAPORE; editing by Jason Neely and Marguerita Choy)

Oil prices slide on oversupply, economic headwinds

Smoke rises from State Oil Refinery Nico Lopez in Havana, Cuba

By Devika Krishna Kumar

NEW YORK (Reuters) – Oil prices fell to 2-1/2-month lows on Monday on rising concerns that a global glut of crude and refined products would weigh on markets, delaying a long-anticipated rebalance in the market.

Data from market intelligence firm Genscape pointing to a an inventory rise of 1.1 million barrels at the Cushing, Oklahoma delivery base for U.S. crude futures in the week to July 22 weighed down crude prices, said traders who saw the numbers.

A massive overhang in refined products, particularly gasoline, despite forecasts for record U.S. summer driving has made investors less optimistic about a quick market rebalancing.

The threat of resurgent U.S. oil production with the rise of drilling rigs and a strong dollar added to the gloomy sentiment in the market, traders and brokers said. [USD/] [RIG/U]

Brent crude futures were down 89 cents at $44.80 a barrel by 11:13 a.m. EST (1513 GMT), their lowest since May 10. U.S. crude was down 93 cents at $43.26 a barrel, after touching a low of $43.18, also the lowest since May 10.

“Supply continues to return from disruptions, refined products are severely oversupplied, crude demand is falling well short of product demand, and key product demand is decelerating,” Morgan Stanley said in a note.

The decline in U.S. output has been key to balancing a market that has been grappling with excess crude for nearly two years, but with prices recovering from 12-year lows, signs of drilling activity have re-emerged.

U.S. drillers added oil rigs for a fourth consecutive week, according to last week’s data from a closely followed report by energy services firm Baker Hughes.

But it could be premature to assume it could lead to a rise in production, some analysts said.

“Although drilling activity is now at its highest level since the end of March, it is still 30 percent below the level at which it found itself at the beginning of the year.” Commerzbank analysts said in a note.

Barclays bank said global oil demand in the third quarter of 2016 was expanding at less than a third of the year-earlier rate, weighed down by anaemic economic growth.

Globally, demand support from developed economies had faded, while growth from China and India had slowed, Barclays said.

New tensions in Libya highlight that the OPEC member is unlikely to see a significant boost to its oil exports any time soon, after the national oil corporation said it objected to a deal to reopen key ports.

(Additional reporting by Ahmad Ghaddar in London, Henning Gloystein in Singapore and Osamu Tsukimori in Tokyo; Editing by William Hardy and M Choy)

Record-breaking S&P 500, Dow rally stalls on oil drop

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 12, 2016.

By Sam Forgione

NEW YORK (Reuters) – Major U.S. stock indexes gave back gains on Wednesday after hitting record intraday highs and European shares slipped after a plunge in oil prices pushed energy stocks lower on both sides of the Atlantic.

Oil prices plummeted more than 4 percent, crimping the record-breaking rally in U.S. shares, while European shares dipped after four straight days of gains. Investors also awaited second-quarter corporate earnings.

The S&P energy index was last down 1.2 percent and the STOXX Europe 600 Oil & Gas index ended 1 percent lower. The U.S. government stunned the market with a raft of bearish inventory data that added to renewed concerns over a global glut of oil.

The benchmark S& P 500 hit 2,156.45 earlier on Wednesday, topping Tuesday’s intraday record of 2,155.40, while the Dow hit 18,390.16 to top Tuesday’s record intraday peak, the third straight day of such peaks for the S&P and the second for the Dow.

The FTSEurofirst 300 index of top regional shares earlier touched its highest in more than two weeks for the second straight day.

Shares had advanced partly on the view that the U.S. economy was on solid footing and on the expectation that central banks in most developed economies would continue to keep interest rates at rock-bottom levels. In addition to the S&P 500 and Dow hitting record closing highs Tuesday and intraday highs Wednesday, the Nasdaq had turned positive for the first time in 2016 Tuesday.

Reduced political uncertainty in Britain and Japan had also helped shares.

“Markets are digesting their recent gains and are somewhat directionless,” said Daniel Kern, chief investment strategist at TFC Financial Management in Boston.

MSCI’s all-country world equity index was last up 0.55 points, or 0.13 percent, at 408.94.

The Dow Jones industrial average was last up 0.75 points at 18,348.42. The S&P 500 was down 2.64 points, or 0.12 percent, at 2,149.5. The Nasdaq Composite was down 9.13 points, or 0.18 percent, at 5,013.69.

Europe’s broad FTSEurofirst 300 index.FTEU closed 0.31 percent lower, at 1,326.3.

Brent crude was last down $2.15, or 4.44 percent, at $46.32 a barrel. U.S. crude was last down $1.99, or 4.25 percent, at $44.81 per barrel.

Safe-haven assets such as U.S. Treasuries, gold, and the Japanese yen rebounded after falling Tuesday. Benchmark 10-year Treasury yields were last at 1.468 percent after hitting a 1-1/2-week high of 1.531 percent Tuesday as higher yields attracted buyers.

“There’s talk that people are adding to their Treasury positions, and we are continuing to see foreign buying on any type of pullbacks,” said Mary Ann Hurley, vice president in fixed income trading at D.A. Davidson in Seattle.

The dollar was last down 0.44 percent against the yen at 104.23 yen after hitting a more than two-week high of 104.97 yen on Tuesday.

Spot gold recovered from its lowest in nearly two weeks, and was last up 0.83 percent at $1,342.26 an ounce.

(Additional reporting by Karen Brettell in New York and Yashaswini Swamynathan in Bengaluru; Editing by James Dalgleish and Nick Zieminski)

Wall St. declines as growth worries, oil weigh

Board showing different value of monies

By Marcus E. Howard

(Reuters) – Wall Street stocks fell in afternoon trading on Tuesday as investors faced continued uncertainty in Europe and tumbling oil prices weighed on energy shares.

The Bank of England said the outlook for Britain’s financial stability after its June 23 vote to leave the European Union, dubbed Brexit, was “challenging” and said it would lower the amount of capital that banks were required to hold in reserve in order to allow them to keep lending.

“After a surprisingly big bounce last week, I think we’re in a little bit of a risk-off trading today – the uncomfortable feeling that maybe all is not fully well given Brexit,” said Jeffrey Carbone, senior partner, Cornerstone Financial Partners, in Cornelius, North Carolina.

Seven of the 10 major S&P sectors were lower. The energy sector <.SPNY> fell 2.4 percent. The materials index <.SPLRCM> was down 2 percent.

The financial sector <.SPSY> was down 1.9 percent with JPMorgan <JPM.N>, Wells Fargo <WFC.N> and Citigroup <C.N> falling between 2.4 and 3.8 percent.

Oil prices <LCOc1> <CLc1> also slipped more than $2 per barrel as a potential economic slowdown weighed on prospects for demand.

Tepid U.S. data added to overall growth worries. Data showed new orders for U.S. factory goods fell in May on weak demand for transportation and defense capital goods.

New orders for manufactured goods declined 1.0 percent after two straight months of increases, according to the U.S. Commerce Department.

At 2:20 p.m. (1820 GMT), the Dow Jones industrial average <.DJI> was down 130.39 points, or 0.73 percent, to 17,818.98, the S&P 500 <.SPX> had lost 17.28 points, or 0.82 percent, to 2,085.67 and the Nasdaq Composite <.IXIC> had dropped 50.52 points, or 1.04 percent, to 4,812.04.

Investors have been seeking safe-haven assets in an uncertain economic environment. Weak data from China added to the nervousness stemming from Britain’s vote to leave the EU.

Data from China showed services sector activity hit an 11-month high in June but a composite measure of activity including manufacturing fell to its lowest in four months.

Tesla’s <TSLA.O> shares fell 1.8 percent to $212.67 after the electric car maker missed vehicle delivery targets for the second consecutive quarter.

Netflix <NFLX.O> rose 0.8 percent to $97.45 after it reached an agreement with Comcast <CMCSA.O> for its services to be available on the cable company’s set-top box. Comcast was down 1 percent at $64.60.

Declining issues outnumbered advancers on the NYSE by 2,267 to 742, for a 3.06-to-1 ratio on the downside; on the Nasdaq, 2,075 issues fell and 717 advanced for a 2.89-to-1 ratio favoring decliners.

The S&P 500 posted 66 new 52-week highs and one new low; the Nasdaq recorded 61 new highs and 29 new lows.

(Additional reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Don Sebastian and James Dalgleish)

Oil prices dive as Britain votes to leave EU

Voters for leaving EU, dropping oil prices

By Ahmad Ghaddar

LONDON (Reuters) – Oil prices slumped by more than 6 percent on Friday after Britain voted to leave the European Union, raising fears of a broader economic slowdown that could reduce demand.

Financial markets have been worried for months about what Brexit, or a British exit from the European Union, would mean for Europe’s future, but were clearly not fully factoring in the risk of a leave vote.

British Prime Minister David Cameron, who campaigned to remain in the EU, said he would stand down by October.

Brent crude <LCOc1> was down 4.85 percent or $2.47 at $48.44 a barrel at 1140 GMT. U.S. crude <CLc1> was down 4.6 percent or $2.31 at $47.80 a barrel.

Earlier in the day, both contracts were down by more than $3, or over 6 percent, the biggest intra-day declines for both since April 18, when a meeting of top global oil producers failed to agree on an output freeze.

Sterling <GBP=> sank 10 percent in value to its weakest since the mid-1980s. The FTSE 100 <.FTSE> fell more than 8 percent at the open, with banks among the hardest hit, but by 1140 GMT had recovered some ground to stand 4.3 percent lower.

“The global uncertainly that (the vote) is likely to unleash is likely to have a potentially negative effect on GDP growth, not only in the UK, but potentially in Europe,” said Michael Hewson, chief market analyst CMC markets.

“Obviously we don’t know that yet, but certainly in the context of where we were 24 hours ago, the knee-jerk reaction is to sell on the reality,” he added.

Some analysts said oil could face further downward pressure.

“Our view is that we have not yet seen the low oil price of the day with Brent likely to trade down towards $45 or lower before we have seen the worst of it,” Bjarne Schieldrop, chief commodity analyst at SEB, said in note to clients.

“Higher risk aversion is likely to make it hard for prices to regain the $50 per barrel mark in anything like the near future,” said Commerzbank analyst Carsten Fritsch.

BP <BP.L> said on Friday its headquarters would remain in the United Kingdom, despite the vote.

The vote to break with Europe is set to usher in deep uncertainty over trade and investments.

“Any further downturn in the economy or volatility in the oil price could cause further distress in the sector and in particular further project….deferrals might have significant consequence for the service sector who also rely on mobility of employees around the world,” PwC UK and EMEA oil and gas leader Alison Baker said.

(Additional reporting by Aaron Sheldrick in Tokyo and Florence Tan in Singapore; editing by Jason Neely)