Crude hits $50 on hopes U.S. inventories will shrink
London (Jun 22) Brent crude LCOQ6, +0.08% , the global oil benchmark, rose 0.9% to $51.07 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLQ6, +0.24% were trading up 1.1% at $50.40 a barrel.
U.S. crude likely fell 5.2 million barrels in the week ended June 17, according to data provided by the American Petroleum Institute. The group expects a 1.5-million-barrel decrease in gasoline stocks and a 1.7-million-barrel drawdown in distillates inventories.
The U.S. Energy Information Administration will release its closely watched inventory data later on Wednesday. The American Petroleum Institute, an industry group, said late Tuesday that U.S. crude stockpiles fell 5.2 million barrels last week. A survey of analysts by The Wall Street Journal expects a 1.6-million-barrel decrease.
“The API data supports oil prices and increases volatility ahead of this afternoon’s official” data, said Michael Poulsen, oil analyst at Global Risk Management.
Analysts at Barclays said that while oil markets have recently been supported by a spate of production outages around the globe and strong demand out of China, “oil isn’t out of the woods yet” due to fragile global growth and high inventory levels.
Large oil stockpiles have been a stumbling block for oil prices. The gradual resumption of Canada’s oil-sand production after wildfires and rising output by Iran and Iraq all point to a growth in the global glut of crude.
In the near term, oil investors are keeping a close eye on the upcoming U.K. “Brexit” referendum that will decide on membership in the European Union.
Read: The Brexit vote — everything you need to know about the referendum
See: When will we know the result of the Brexit vote?
Analysts said that while a British exit from the EU, or “Brexit,” might not have an immediate impact on oil, the market could suffer collateral damage. A British EU departure could damp appetite for riskier assets such as commodities. Oil could also take a hit from a rising dollar, which analysts expect if the U.K. votes to leave.
“If the U.K. leaves, along with many unknowns, investors will shed risk investments like oil for havens,” said Stuart Ive, client manager at OM Financial.
The latest opinion polls have sent conflicting signals. A survey by pollster Survation Ltd. and another by YouGov PLC showed the two sides in a close race, with Survation putting the Remain camp and YouGov the Leave camp slightly in the lead. The outcome of the vote is expected Friday morning.
Nymex reformulated gasoline blendstock for July LCOQ6, +0.08% — the benchmark gasoline contract — rose 0.8% to $1.61 a gallon. ICE gasoil for July changed hands at $453.50 a metric ton, up $7.50 from the previous settlement.