Coins stacked on top of performance papers
Markets

U.S. crude halts 3-day win streak as strong dollar, Brexit weigh

Investing.com -

Investing.com -- U.S. crude futures halted a three-day winning streak on Tuesday, amid a broadly stronger dollar, as Brexit concerns remained in focus and energy traders await the American Petroleum Institute's weekly inventory report after the close of trading.

On the New York Mercantile Exchange, WTI crude for August delivery traded between $48.87 and $49.95 a barrel before closing at $49.77, down 0.19 or 0.38% on the session. On the Intercontinental Exchange (ICE), brent crude for August delivery wavered between $49.48 and $50.69 a barrel, before settling at $50.55, down 0.10 or 0.20% on the day. Crude futures closed on Tuesday near session-highs, paring sharp losses from U.S. morning trading.

Meanwhile, the spread between the international and U.S. benchmarks of crude stood at $0.78 , slightly above Monday's level of $0.69 at the close of trading. The front month contract for U.S. crude rolled over to August on Sunday.

Investors continued to trade cautiously on Tuesday, less than 48 hours before a controversial Brexit referendum is held in the U.K. Oil prices have spiked roughly 7% since last week's tragic killing of Labour Party parliament member Jo Cox, a staunch supporter of the Remain campaign. Following Cox's death in Leeds on June 16, officials on both sides suspended campaigning for two days, helping the "Stay," camp regain momentum. Currently, there is a 76% chance the Remain vote will prevail, according to British sportsbook Ladbrokes (LON:LAD), up slightly by one point from Monday's odds. Last week, the "Leave" campaign trailed in median polls by a margin of 60-40.

In recent months, a number of major oil companies have expressed stark concerns on the ramifications that could result due to a U.K. departure from the EU. While potentially creating heightened trade barriers between the U.K. and major partners in the euro zone, a Leave vote could also complicate free travel arrangements with British workers employed by foreign oil companies. In addition, Federal Reserve chair Janet Yellen cautioned on Tuesday that a Brexit could create a "risk-off" sentiment among traders that has the potential of creating a flight-to-safety in currencies such as the dollar. Such an environment is viewed as bearish for dollar-denominated commodities like crude, which becomes more expensive for foreign purchasers when the dollar appreciates.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.40% to an intraday high of 94.15, bouncing from one-week lows from Monday's session. The index is still down by more than 5% since early-December.

Investors await the release of the American Petroleum Institute's weekly crude stockpile report after the bell for further indications on the supply-demand balance on U.S. domestic energy markets. On Monday, data intelligence provider Genscape, Inc. reported a draw of 568,213 at the Cushing Oil Hub in Oklahoma for the week ending on June 17. Separately, Wednesday's government report from the U.S. Energy Information Administration (EIA) could show a nationwide draw of 1.9 million barrels for the week.

Elsewhere, traders monitored conflicting reports out of Nigeria on a 30-day ceasefire in the nation's Southern Delta region. Officials from the Niger Delta Avengers (NDA), a militant group which has claimed responsibility for a series of attacks on the oil infrastructure in the region, told Reuters that it has not agreed to a ceasefire with the Nigerian government. Earlier, multiple outlets reported that NDA came to terms on an agreement last week with Nigeria's oil ministry and several state government that would halt the acts of sabotage for at least the next month.

Despite a massive rally over the last five months, crude prices are still down more than 50% from their peak of $115 a barrel.

Investing.com offers an extensive set of professional tools for the financial markets.

Read more News on Investing.com and download the new Investing.com apps for Android and iOS! http://glocdn.investing.com/news/crude_oil_M_1440050122.jpg

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ForEx