Oil and commodities shrug off Brexit slump

Oil approached the end of the week down slightly on a midweek rally but still well ahead of its lowest point after Britain's shock vote to leave the European Union.

North Sea Brent crude recovered from a Monday low of USD 47.16 to hit USD 49.68 by today.

And West Texas Intermediate flirted with valuations as low as USD 46.33 during the week before reaching USD 48.15.

Analysts pointed to several factors for oil's failure to recoup the pre-Brexit peak of just over USD 50.

Comments from Bank of England governor Mark Carney that pointed at a rate cut this summer took the pound and euro lower, striking a blow at demand for dollar-denominated oil.
 

And supplies are set to remain ample after clouds hovering over production in Nigeria and Norway cleared.

With Saudi Arabia continuing to fight a battle for market share by cutting prices, "odds are on further weakness next week," according to analysts at PVM.

Industrial metals shrugged off losses they had taken through the week in the wake of the British referendum.

Copper reached a two-month high of USD 4,856 per tonne on yesterday, while aluminium reached its highest point since the start of May at USD 1,664.

Lead and nickel also flirted with three-month highs in Friday trading, helped by expectations that Asian central banks will do more to help economic growth, especially in China.

"Market participants clearly expect the Chinese authorities to take monetary policy measures in the next few weeks in a bid to minimise the negative impacts of the 'Brexit' on Asia's largest economy," said analysts at Commerzbank.

China is the largest consumer of industrial metals worldwide -- with the UK accounting for less than 1 per cent of global consumption of most base metals.

"Any economic slowdown the UK may suffer will have a negligible impact on the supply-demand balances," agreed analysts at UniCredit.

"Ultimately, the metals might end up being more affected by what Brexit has done to the dollar."

Gold remained strong over the week, rallying from a slight dip on Monday -- when holders cashed in on the precious metal's spike after the British results emerged on June 24 -- to reach USD 1,341 per ounce Friday.