Oil prices were slightly higher after falling earlier in Asian trading on Wednesday amid the wider market turmoil set off by mounting concerns over the economic impact of Britain’s vote to leave the European Union.
U.S. crude was up 4 cents at $46.64 a barrel at 0635 GMT, after initially gaining then falling in thin trade. The contract fell 5 percent to end at $46.60 on Tuesday as U.S. investors digested news of an OPEC increase in production after the July 4 holiday on Monday closed trading.
Brent futures were up 5 cents at $48.01. On Tuesday they settled down 4.3 percent at $47.96 a barrel.
Oil prices are up almost 80 percent from 12-year lows of around $27 for Brent and $26 for U.S. crude in the first quarter and they are ripe for supply shocks just as the so-called Brexit vote came as a body blow to global growth hopes.
“You have the dollar strengthening, risk aversion rising because of the ongoing Brexit saga and then there are the actual supply and demand aspects to consider on top of all this,” Fawad Razaqzada, market analyst for forex.com, said in a note.
The pound slumped to a new 31-year low against the dollar in early Wednesday trading, after three UK property funds were suspended in the face of a rush of redemptions from investors fearing a slump in British property values.
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The Bank of England also took steps to ensure British banks keep on lending, by lowering the amount of capital banks must hold in reserve, as UK business confidence plunged.
A flurry of data from China in the coming weeks is also likely to show weaker trade and investments.
The rebound in crude had been fueled by supply outages from Canada to Nigeria that created the perception that a two-year-old supply glut may be easing.
But OPEC’s oil output in June was its highest in recent history, as Nigeria’s oil industry partially recovered from militant attacks and Iran and Gulf members boost supplies.
Market intelligence firm Genscape was showing a build of 230,025 barrels at the Cushing, Oklahoma storage hub for U.S. crude futures, during the week to July 1, traders said.
The yen rose further on Wednesday as investors hit the shelters with a broad risk-off mood gripping wider markets, while gold also climbed.