Oil prices fell in Asia today, snapping two days of gains, ahead of a report on US crude inventories and the British referendum on whether to stay in the European Union.
Worries that Britons will vote to leave on Thursday has frayed nerves, and global investment titans Li Ka-shing and George Soros warned of economic doom if the country leaves bloc.
“Uncertainty around the outcome of the EU referendum is… likely to have resulted in a trimming of stretched long positions in the oil market,” British bank Barclays said in a note, projecting a “volatile path ahead for oil prices” over the second half of the year.
“In the event that the UK votes to leave the EU, we expect global economic growth to stagnate, and that factor would have the most influential impact on oil prices over the next 4-6 quarters,” it added.
At about 0910 IST, US benchmark West Texas Intermediate fell 16 cents, or 0.32 per cent, to USD 49.21 a barrel and Brent was down 23 cents, or 0.45 per cent, at USD 50.42.
“Oil has been dominated by general market sentiment over the past week and less by specific oil factors,” Angus Nicholson, a markets analyst in Melbourne at IG Ltd told Bloomberg News.
“That will probably continue for the rest of the week and the Brexit vote is on everyone’s mind at the moment.”
Traders are also waiting for the weekly US crude inventories report due tomorrow to gauge demand in the world’s top oil consuming nation, as well as a testimony by Federal Reserve chair Janet Yellen for clues on the timing of a US interest rate increase.
Yellen is due to sit before a Senate committee today.
A US interest rate increase tends to push the dollar higher, making oil more expensive for buyers using other currencies.