Crude oil futures fell in Asian trade on Tuesday, as investors ignored signs of market tightness to focus on concerns over global growth and overnight declines in stocks on the impending vote on Britain’s possible European Union exit.
Brent crude oil futures slipped below $50 a barrel, falling 41 cents to $49.94 by 0643 GMT, dropping for a fourth successive day.
U.S. crude was down 46 cents, or nearly 1 percent, at $48.42 a barrel, also down for a fourth day in a row.
A stronger dollar overnight spilled into the oil market, while markets eyed recent polls showing Britain’s “Leave” campaign in the lead ahead of a referendum on membership of the European Union.
“The risk-off mood that has been pervasive in the markets in the last few days has taken hold of oil prices, with weakness in Asian markets and a strong dollar contributing to Brent crude dripping back below $50 per barrel,” said Mihir Kapadia, CEO at Sun Global Investments, which has assets under management totalling $500 million.
“There are some that think that the recent recovery in prices is due to temporary supply issues and not to do with any strengthening demand on the back of a robust global economy,” Kapadia said.
A vote by Britain to leave the European Union, dubbed “Brexit,” may tip Europe back into recession, putting more pressure on the global economy.
Britain’s “Out” campaign has increased its lead over the “In” camp before the June 23 referendum, according to two opinion polls published by ICM on Monday.
Concerns about Chinese growth are also weighing on sentiment, enough to set aside bullish signs such as a U.S. government forecast on Monday that shale oil output is expected to fall in July for the seventh consecutive month.
OPEC also forecast on Monday that the world oil market would be more balanced in the second half of 2016 as outages in Nigeria and Canada help to speed up the erosion of a supply glut.
Source: Reuters
