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Oil edges up further as Brexit shock fades; US drawdown seen
[NEW YORK] Oil prices rose for the second straight day on Wednesday as concerns over Britain's exit from the European Union faded and impending data was expected to show a sixth weekly draw in US crude stockpiles.
A potential oil workers strike in Norway and a crisis in Venezuela's energy sector also provided support to crude futures.
The US Energy Information Administration will release weekly oil supply-demand data at 10:30 am EDT (1430 GMT).
The American Petroleum Institute trade group indicated on Tuesday that US crude inventories fell by nearly 4 million barrels in the week to June 24, some two-thirds more than the 2.4 million barrel decline forecast by analysts in a Reuters poll.
"The larger-than-expected crude stock draw per the API gave the market an added boost overnight," Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates said in a commentary. "But we still view the larger price motivator as a strong reacceptance of global risk following a 2-session plunge across the financial/commodity spaces related to the Brexit situation," he wrote.
Brent crude futures were up 27 cents, or 0.5 per cent, at US$48.85 per barrel by 9:49 am EDT (1349 GMT).
US crude futures rose 40 cents, or 1 per cent, to US$48.25.
The benchmarks gained 3 per cent on Tuesday, recovering from an 8 per cent drop over two previous sessions after Britain's vote.
Standard Chartered said it expected oil prices to return to US$50 per barrel rapidly as the Brexit impact on energy markets appeared limited.
Others were not so sure.
"The caution flag is still flying as the current rally could be simply a short-term bounce in a broader down move," said Dominick Chirichella, senior partner at the Energy Management Institute in New York. He said API crude drawdown data, especially, had been grossly above official numbers of late.
Concerns are also growing that a looming glut in refined oil products, especially in Asia, could spill into crude.
In the United States, the focus is on gasoline and refining margins for the fuel, which have underperformed despite expectations of heavy demand during the peak summer driving demand.
"Gasoline has lost its mojo, which means the lighter end of the barrel has also lost some of its appeal," said Scott Shelton, energy broker with ICAP in Durham, North Carolina. "If this is what max (refinery) runs look like, what is it going to be in a few months when we go back into maintenance?"