Oil prices dip ahead of US inventories data, Brexit vote

[NEW YORK] Oil prices fell modestly on Tuesday after a two-day rally as dealers awaited the latest report on US crude inventories and Britain's crucial vote on European Union membership this week.

Markets were on tenterhooks two days before Britain's EU referendum on Thursday. New polls showed Tuesday the vote was still too close to call between supporters favoring remaining in the EU and those backing an exit.

"It's a pullback from the boost we saw yesterday that was heavily influenced by optimism about the Brexit vote, optimism they would not exit, in the sense that would help capital markets around the world, certainly in Europe," said Mike Lynch of Strategic Energy & Economic Research.

US benchmark West Texas Intermediate (WTI) for July delivery fell 52 cents to US$48.85 a barrel on the New York Mercantile Exchange.

In London, Brent North Sea crude for delivery in August, the global benchmark, slipped three cents to US$50.62 a barrel.

"Profit-taking ahead of US inventories data is definitely one of the reasons why crude prices have pulled back, especially since prices had risen rather sharply in the previous two trading days," said City Index analyst Fawad Razaqzada.

Crude futures pared losses that had pushed the WTI futures contract down more than US$1 a barrel earlier in the session.

"July WTI crude oil expires today, and so trading in that particular instrument may see some volatility related to thinning volumes... which may be independent of wider market conditions," said Tim Evans of Citi Futures.

Traders also appeared cautious ahead of the US Department of Energy's report on the country's petroleum stockpiles on Wednesday.

US commercial crude inventories are expected to have declined by 1.5 million barrels last week, according to a survey of experts by Bloomberg News. US crude stockpiles remain at record-high levels amid a global market awash in supply.

AFP