Oil gains over 3% after two-session Brexit-inspired tumble 

Oil futures finished higher for the first time in three sessions on Tuesday, rebounding from a Brexit-fueled selloff that sent crude futures to a seven-week low on concerns of a slowdown in the global economy.

The threat of a union strike by Norwegian oil-and-gas workers and weakness in the U.S. dollar also provided support to prices.

Natural-gas prices, meanwhile, got a weather-related boost, with volatility tied to expiration of the July futures contracts, which rallied by more than 7%, helping to exacerbate the move.

August West Texas Intermediate crude CLQ6, +1.17%  climbed $1.52, or 3.3%, to settle at $47.85 a barrel on the New York Mercantile Exchange, while August Brent crude LCOQ6, +1.07%  gained $1.42, or 3%, to $48.58 a barrel.

On Monday, WTI crude settled at its lowest level in more than a week, while Brent finished at its worst level in about seven weeks as investors dumped energy as part of a wider global selloff in the wake of the unexpected U.K. vote last week to leave the European Union, dubbed Brexit.

Markets stabilized a bit on Tuesday, with the pound GBPUSD, +0.3897%  stopping its slide, and European stocks SXXP, +1.35%  and U.S. equities SPX, +1.78%  posting firm gains.

“These markets had been severely oversold, so a bounce was overdue anyway, while hopes have also risen about the prospects of a more coordinated central bank response to support the financial markets,” said Fawad Razaqzada, technical analyst at Forex.com.

The ICE U.S. Dollar Index DXY, -0.27%  also fell 0.3%, offering a boost to dollar-denominated oil.

“An easing in [U.S. dollar] strength is serving to buoy the all-important commodities space while some cautious optimism is creeping back into the new trading week,” said analysts at Accendo Markets in a note.

“Expect economists’ outlooks over the coming days and weeks to dictate the direction of oil, however, a longer term slowdown in demand is seen as unlikely,” they added.

In the U.S., data showed that consumer confidence took a step higher in June, though the figures covered a time before the Brexit vote.

Oil supply issues also factored into Tuesday trading as up to 7,500 oil-and-gas workers in Norway, which is one of Europe’s major producers, may be affected by a strike starting Saturday. The workers are demanding a new wage deal before midnight July 1, The Wall Street Journal reported.

The American Petroleum Institute will release weekly data on U.S. petroleum supplies late Tuesday, while the Energy Information Administration will release its weekly report early Wednesday.

Analysts surveyed by S&P Global Platts expect to see a fall of 2.4 million barrels in crude-oil inventories, along with declines of 600,000 for gasoline supplies and 1 million barrels for distillates, which include heating oil.

On Nymex, July gasoline RBN6, +0.30%  tacked on 3.3 cents, or 2.3%, to $1.51 a gallon and July heating oil HON6, +0.98% added 4.2 cents, or 2.9%, to $1.471 a gallon.

Natural-gas futures rallied, with the July contract for natural gas NGN16, +7.51%  , which expired at the settlement, jumping 20.1 cents, or 7.4%, to $2.917 per million British thermal units. That was the highest settlement since August 2015, according to data from Dow Jones.

The new front-month contract August natural gas NGQ16, -0.28% tacked on 14.9 cents, or 5.4%, to $2.89.

“We are seeing predictions for record heat in July at a time when U.S. natural-gas production is falling,” said Phil Flynn, senior market analyst at Price Futures Group.

“The market is getting concerned about the ability of natural-gas producers to meet what should be record natural-gas demand in a few weeks,” he said. “For the first time in history, because of the retirement of many coal plants, natural gas is the main power generation source.” Read more about what’s propelling natural-gas futures higher.

Source: MarketWatch

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