Oil lifted by other markets ahead of Britain’s EU vote
By Karolin Schaps
LONDON (Reuters) – Oil prices rose by up to 2 percent, shrugging off a smaller-than-expected draw on U.S. crude stocks as money and equity markets firmed after the last pre-vote opinion polls raised expectations that Britain will stay in the European Union.
Markets, including commodities, have been on tenterhooks ahead of Thursday’s referendum on Britain’s EU membership. Most results are expected between 0100 and 0300 GMT, with a YouGov exit poll soon after voting closes at 2100 GMT.
Global benchmark front-month Brent crude was trading up 79 cents at $50.67 a barrel by 1303 GMT. It touched an intra-day high of $50.90 a barrel, up $1.02 from Wednesday’s close.
U.S. futures stood at $49.84, up 71 cents.
“Most market participants are positioned ahead of the Brexit voting or are waiting on the sidelines to see the final outcome,” Hans van Cleef, senior energy economist at ABN Amro, said.
Some of the last opinion polls published late on Wednesday showed the “Remain” campaign ahead, propelling sterling to a 2016 high against the dollar, while Britain’s top share index hit a two-month high.
Oil defied bearish news that U.S. weekly crude inventories dropped by less than expected. The Energy Information Administration said on Wednesday that stocks fell by 917,000 barrels in the week to June 17, compared with expectations of a 1.7 million barrel decrease.
If Britain votes to remain in the EU, the oil market is likely to switch its focus to fundamentals, returning its attention to the supply and demand picture.
“The first emerging signs in April and May that the deep capex cuts in upstream oil production have started to hurt oil production … could turn out to be a clearly visible trend,” said Bjarne Schieldrop, chief commodities analyst at SEB.
The Nordic bank lifted its 2016 Brent crude oil estimate to $48 a barrel, up from $44 previously, and raised its 2017 price forecast to $55 a barrel from $50.
In a sign that weak investments are impacting production, the Canadian Association of Petroleum Producers cut its 2030 Canadian oil output forecast by 400,000 barrels per day (bpd) to 4.9 million bpd.
Saudi Arabia’s energy minister said that he saw the oil market returning to balance and prices had risen in response to supply and demand edging closer to equilibrium.
(Additional reporting by Aaron Sheldrick in Tokyo; Editing by David Goodman and Alexander Smith)