Oil prices fell for a fourth straight day on Tuesday, swept lower by investor nervousness over Britain’s vote next week on whether to leave the European Union, which overshadowed signs of a return to health for crude markets.
Safe-haven German Bund yields fell below zero for the first time, while industrial commodities and equity markets, seen as more vulnerable to economic risk, dropped after polls showed Britain’s “Leave” campaign leading ahead of the June 23 vote on EU membership.
The referendum-related concerns eclipsed an upbeat forecast for oil demand growth from the International Energy Agency, which said the oil market is essentially balanced after two years of surpluses. On Monday, OPEC forecast that the world oil market would be more balanced in the second half of 2016 as outages in Nigeria and Canada help to speed erosion of a supply glut.
Brent crude oil futures fell 50 cents to $49.85 a barrel by 1402 GMT, while US crude futures lost 40 cents to $48.48 a barrel.
“Even as both OPEC and the International Energy Agency talk about a tighter oil market, fear of the fallout from a UK exit from the euro zone is throwing global markets into a tizzy,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
The campaign for Britain to leave the EU has a “significant lead” ahead of the referendum, according to a poll from TNS.
“This (the referendum) has rattled a lot of financial and commodity trader/investors with money seemingly starting to flow to the so-called safe-haven US dollar until the dust settles and the voting is concluded,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
“The strong US dollar versus most currency pairs is a negative price directional driver for the oil complex.”
Source: Arab News