Oil traded near $48 a barrel as the market remained volatile after the U.K. last week voted to leave the European Union.
Futures rose as much as 0.7 percent after declining 1.5 percent earlier in New York, following Friday’s 4.9 percent slump, the biggest drop in four months.
The turmoil in financial markets continued Monday with the pound extending its selloff. Oil prices may plunge if the shock of Britain’s vote to exit the EU is combined with a boost in output, Russian Energy Minister Alexander Novak said.
Oil had a second weekly drop on Friday as prices slid with industrial metals and European equities after the U.K. voted to quit the EU following more than four decades of membership.
While Nigeria continues talks to restore output lost to rebel attacks and Canada restarts after wildfires, Saudi Arabia, the International Energy Agency and BP Plc see a balance emerging between supply and demand that’s already pushed prices up more than 80 percent from a decade low in February.
“There might have been an overreaction on Friday, where markets were plagued with uncertainty, which is leading prices slightly higher today,” Jens Naervig Pedersen, an analyst at Danske Bank A/S in Oslo, said by e-mail. “The oil market looks about fair prices from a fundamental point of view.”
West Texas Intermediate for August delivery rose 18 cents to $47.82 a barrel on the New York Mercantile Exchange at 9:18 a.m. London time after losing as much as 72 cents earlier. The contract fell $2.47 to $47.64 on Friday. Total volume traded was about 5 percent above the 100-day average.
Brent for August settlement was up 36 cents at $48.77 a barrel on the London-based ICE Futures Europe exchange after falling as much as 1.3 percent earlier.
The contract dropped $2.50, or 4.9 percent, to $48.41 on Friday. The global benchmark crude traded at a premium of 93 cents to WTI.
Returning production in Canada and Nigeria, combined with the Brexit result, could mean “the drop in prices in the short term may be serious,” Russia’s Novak said in an e-mailed statement. If supply isn’t restored, a return to fundamentals is likely fairly quickly, he said.