SINGAPORE: Oil prices fell in Asia Tuesday, 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 the EU on Thursday has frayed nerves, and global investment titans Li Ka-shing and George Soros warned of economic doom if the country exits.
“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 four to six quarters,” it added.
At about 7:50 a.m. local time, US benchmark West Texas Intermediate fell 41 cents, or 0.83 percent, to $48.96 and Brent was down 48 cents, or 0.95 percent, at $50.17.
“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 Wednesday 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 on Tuesday.
A US interest rate increase tends to push the dollar higher, making oil more expensive for buyers using other currencies.