Oil price falls on improving supply outlook, economic worries

Oil prices fell on Thursday as the prospects for supply improved while the economic outlook darkened, but analysts said they still expect prices to rise in the second half of the year.

Brent crude futures LCOc1 were trading at $50.19 per barrel at 0655 GMT, down 42 cents, or 0.83 percent, from their last settlement. U.S. crude CLc1 was down 37 cents, or 0.74 percent, at $49.51 a barrel.

The lower prices were a result of a higher supply outlook as well as concern over a slowing economy, compounded by Britain’s vote to leave the European Union.

“With a ceasefire in Nigeria and Canadian wildfires (receding) oil prices may come under pressure,” ANZ bank said.

“The vote to exit adds further to uncertainty in the global economy.”

In Asia’s No.2 economy, Japan, industrial output slid in May at the fastest rate in three months to its lowest level since June 2013, in the latest sign that Asian growth is stalling.

On the supply side, fears of sharp production cuts from a looming strike by Norway’s oil sector eased as output from the North Sea’s biggest producer would only fall by about 7 percent in case of a walk-out, according to Norway’s Petroleum Directorate.

In Nigeria, output has recovered by 200,000-300,000 barrels per day (bpd) since mid-June after attacks on oil infrastructure knocked out some 600,000 barrels of daily oil production to around 1.25 million bpd, down from 2 million bpd at the beginning of the year.

“The government (is) optimistically aiming for a return to normal production by end-July,” Goldman Sachs said.

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