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Oil jumps on easing Brexit fears, weaker US dollar

Tuesday, June 21, 2016 - 06:55
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Oil prices jumped again on Monday in volatile markets thanks to rising expectations that Britain would vote to remain in the European Union this week, pushing the dollar lower.

[NEW YORK] Oil prices jumped again on Monday in volatile markets thanks to rising expectations that Britain would vote to remain in the European Union this week, pushing the dollar lower.

US benchmark West Texas Intermediate for July delivery leaped US$1.39 to US$49.37 a barrel on the New York Mercantile Exchange.

In London, Brent North Sea crude for delivery in August, the global benchmark for crude oil, finished at US$50.65 a barrel, up US$1.48 from Friday's settlement.

"The petroleum markets have extended Friday's gains on a further downgrading of the risk that Britain will vote to leave the European Union in Thursday's referendum," said Tim Evans of Citi Futures.

Recent polls in Britain showed the "Remain" camp gaining ground against "Leave" supporters, putting the race neck-and-neck just three days before the referendum.

In a strong Brexit relief rally, global stock markets surged higher and the US dollar weakened Monday. The combination of those factors were helping to drive a boost in crude oil prices as investors swung back into riskier assets, Evans said.

A generally weaker US currency made dollar-priced oil cheaper for buyers using other currencies.

News about lower Norway oil production also helped support the market plagued by abundant supplies.

"You have reports up this morning that Norwegian production is going to be down over 200,000 barrels per day in June," said Bob Yawger of Mizuho Securities USA.

AFP