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Oil prices rise ahead of UK vote; West Texas up 0.71%

by June 23, 2016 General

June 24, 2016, 12:28 am TWN

SINGAPORE — Oil prices rose in Asia on Thursday, hours ahead of a high-stakes British vote on whether to remain in the European Union.

As with financial markets, oil traders are closely watching the referendum as analysts warn that a British exit could see the country tumble into recession with global spillover effects.

Markets tumbled last week after polls pointed to a win for the “Leave” camp but they have rallied over the past four days as the pro-EU campaign has recovered momentum.

While most polls have the two sides neck and neck, bookmakers have the “Remain” side as clear favorites.

Polls “are susceptible to polling bias, but that has not stopped the public from taking reported polls at face value,” said IG Markets analyst Bernard Aw in a note.

“Markets appeared to be pricing in a ‘Remain’ outcome,” he added.

At about 0600 GMT, U.S. benchmark West Texas Intermediate was up 35 cents, or 0.71 percent, at US$49.48 and Brent gained 34 cents, or 0.68 percent, to US$50.22 a barrel.

Prices closed lower Wednesday after official data showed U.S. crude inventories had fallen less than expected.

The American Department of Energy said commercial stockpiles last week dropped by 900,000 barrels, far fewer than the 1.5 million forecast by analysts, an indication that the persistent supply glut is not easing as quickly as expected.

There are also concerns that oil above US$50 may lead more producers to renew pumping, adding on to an already saturated market.

Oil prices have rebounded since hitting lows of below US$30 in February, but current levels are still a long way off the 2014 highs of more than US$100.