Oil prices fell today even as OPEC forecast a further tightening of supplies, as traders focused instead on turbulence across financial markets.
The Organization of the Petroleum Exporting Countries, whose 13 members together pump out about one-third of the world's crude, said Monday that a global supply glut was likely to shrink further, leading to greater balance between supplies and demand of oil.
Around 1145 GMT, Brent North Sea crude for delivery in August was down 44 cents at USD 50.10 a barrel.
US benchmark West Texas Intermediate for July delivery fell 50 cents to USD 48.57 a barrel compared with Friday's close.
Crude prices had tumbled on Friday at the end of a volatile week, during which WTI struck an 11-month high, as a weaker dollar made the commodity cheaper for holders of non-US currencies.
"Oil prices have fallen because of various reasons, chief among them being a rallying US dollar and a sharp rise in risk aversion," Fawad Razaqzada, analyst at traders City Index, said today.
"This is evidenced, for example, by the slumping global stock markets, and rallying safe-haven government bond prices, yen and gold.
"Investors are spooked about the prospects of a UK exit from the EU, the economic impact of a potential US rate rise in the summer, and renewed demand concerns out of China," he added.
World stock markets fell sharply today on rising fears that Britain could vote to leave the European Union in next week's referendum and owing to uncertainty on the outlook for US interest rates.
On oil markets, a combination of tighter supplies and a downbeat dollar sent oil prices surging to fresh 2016 high points last week, before they dropped on worries over the global economic outlook.
OPEC today said "the excess supply in the market is likely to ease over the coming quarters".
In its June report, OPEC attributed the recovery to a myriad of factors, including a weaker dollar, falling production in the US and forecasts of a sharp fall in non-OPEC oil supply this year, partly owing to disruptions in some producer countries.
On Friday, data showed the number of active US rigs rose for the second week in a row, by three to 328, according to oilfield services firm Baker Hughes. However, that is still far below the 635 pumping a year ago.
