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Oil prices sink as Nigeria production rises

NEW YORK (AFP) – Oil prices fell sharply Tuesday as news of increased production from Nigeria and a jump in overall OPEC output stoked fears of the crude surplus persisting on the global market.

Both key global contracts lost more than $2.00 a barrel amid ongoing worries as well that the economic impact of Britain s vote to leave the European Union will also spell slower demand for oil.

Suicide bombings in Iraq and Saudi Arabia meanwhile had no apparent effect on the market.

London benchmark Brent crude for August delivery finished the day down 4.3 percent at $47.96 a barrel.

In New York, the West Texas Intermediate contract for August delivery lost 4.9 percent to $46.60 a barrel.

Analysts said the market reacted largely to Bloomberg News reports that OPEC crude production rose by 240,000 barrels a day in June, led by a 90,000 barrel gain in Nigeria and 70,000 in Saudi Arabia, the world s top exporter.

Nigeria, Africa s biggest oil producer, pumped an average 1.53 million barrels a day in June after restoring production facilities damaged by rebel attacks.

“Crude oil prices are back well below $50 after Nigerian production was ramped up afresh, tipping the balance of drivers further towards the bearish,” said Michael van Dulken and Augustin Eden at Accendo Markets.

“The increase in OPEC production threatens to postpone the anticipated rebalancing of the global market,” added Tim Evans at Citi Futures.

Meanwhile Britain s vote to leave the European Union continues to rile markets, denting expectations for global growth.

“As global bond markets start to price in the prospect of a global slowdown, oil prices have started to come back off their recent highs,” said Michael Hewson, chief market analyst at CMC Markets.