Dubai: It’s back to square one in the oil markets after last week’s Brexit-induced volatility.

Oil prices are expected to focus back on supply dynamics after posting the best quarter since 2009.

“Market participants have realised that a slowing UK economy will have minimal impact on the levels of global demand for oil, and as a result prices are expected to continue the path of least resistance upwards,” Vaqar Zuberi, Portfolio Manager & Senior Analyst within Mirabaud Asset Management’s Hedge Fund team told Gulf News.

Crude futures climbed 1.4 per cent in New York on Friday, after witnessing massive volatility post the Brexit vote. Oil has surged 26 per cent during the three months ended June 30, the biggest gain since 2009.

“The crude oil market will remain driven the expected reduction of supply over the second half of 2016, and a rebalancing of the market over the next 12 months,” Zuberi said.

Supply disruptions and falling US output have pushed prices up more than 75 per cent from 12-year lows early this year.

Uncertainties

Meanwhile, joining other upgrade in forecasts on oil prices, Emirates NBD raised the average forecast for oil prices to be at $45 per barrel, from $39 up until a month and a half ago.

However, due to uncertainties on various fronts globally, gold would continue to benefit.

“Prices of gold are expected to remain well bid in the upcoming weeks as investors remain concerned about weak Chinese manufacturing data released last week, uncertainties on the implications and modalities of Brexit, and increasing geopolitical worries,” Zuberi said.

Gold has outshone most other commodities, gaining 7 per cent last quarter. It touched a two-year high last week after the Brexit vote sent investors scrambling for safe-haven assets.

Casualty

“The pound is the biggest casualty of Brexit. If the political uncertainty in UK continues for too long, and also the uncertainty over how long will they take to exit Euro continues, there is a room for the pound to fall further,” said Anita Yadav, head of fixed income research with Emirates NBD. The bank expects the pound to be in the range of $1.25-1.40, with the risk on the downside.

On Friday, the pound was at $1.3315, after dropping 0.9 per cent on Thursday. It tumbled the most on record on June 24, hours after the Brexit results, and on June 27 fell to $1.3121, the lowest since 1985.