Oil prices fall as Brexit vote roils the market

Jessica Morris
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Both benchmarks had finished Friday around five per cent lower (Source: Getty)

Oil prices gave up earlier gains this afternoon as the dollar rallied and traders continued to digest the fallout from last week's Brexit vote.

Brent crude, the global benchmark, fell 3.28 per cent to $46.82 a barrel this morning, while West Texas Intermediate crude, the US benchmark, slumped 1.05 per cent to $48.85.

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Both benchmarks had finished Friday around five per cent lower amid a wave of global financial market volatility sparked by Britain's decision to leave the European Union. Markets were taken by surprise after the referendum result defined bookmakers' odds, as well as some polls.

Nevertheless Goldman Sachs, the most influential bank in commodity markets, believes the Brexit vote will have a minimal impact on UK oil demand.

"If we assume a two per cent drop in UK gross domestic product in response to the exit vote, which is on the high end of our economists' estimates, then UK oil demand would likely be reduced by one per cent or 16,000 barrels per day, which is a 0.016 per cent hit to global demand. This is extremely small on any measure," it said.

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Chancellor George Osborne said earlier today that the result will amplify volatility on financial markets, while trading was temporarily suspended in London-listed banking giants Barclays and RBS after they tanked by more than 10 per cent.

But goldbugs benefited the fallout for the second day in a row as nervous investors sought shelter from a storm rippling through financial markets.

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