Oil slips on gasoline glut, Brexit pressure

[NEW YORK] Oil prices edged lower on Wednesday, pressured by a US gasoline glut despite the busy driving season and weaker share prices on Wall Street from more economic worries over Britain's exit from the European Union.

Profit for turning crude oil into gasoline, known as the gasoline "crack," fell to a February bottom below US$13 a barrel as oversupply in the motor fuel forced US refiners to cut output. Vessels carrying gasoline-making components could not unload at New York Harbor this week due to a glut.

"The fundamental weakness in gasoline markets is being exemplified by the crack spread, which is closing in on levels which would encourage refiners to dial back on runs," said Matt Smith, analyst at New York-based oil cargo tracker Clipperdata. "At below US$15 a barrel, the crack is at less than half the profitability it showed this time last year."

US share prices extended losses shortly after they opened on jitters over the Brexit's impact on global growth. The British pound hit a 31-year low after three UK property funds were suspended in the face of a rush of redemptions from investors fearing a slump in British property values.

Brent crude futures were down 22 cents, or 0.5 per cent, at US$47.74 a barrel by 11:10 am EDT (1510 GMT) after a 4 per cent drop in the previous session.

US crude futures slid 35 cents, or 0.8 per cent, to US$46.25 a barrel. That was on top of Tuesday's 5 per cent slump.

Gasoline futures hit a 3-month low, sliding 1.5 per cent to around US$1.46 a gallon.

Ole Hansen, commodity strategist at Saxo Bank in Copenhagen, told the Reuters Global Oil Forum that Brent was edging closer to the technical support level of US$47 a barrel while US crude was approaching support of US$45.80.

REUTERS