Oil rose further above $50 a barrel on Wednesday after an industry report showed a large drop in US crude inventories, with analysts expecting volatile trading ahead of Britain’s referendum on EU membership.
Brent crude was up 20 cents at $50.82 a barrel. US crude climbed 25 cents to $50.10, marking its first rise above $50 since June 10, Reuters reported.
US crude inventories fell by 5.2 million barrels, the American Petroleum Institute said on Tuesday, far more than analysts expected.
“What we have is basically the leftovers of the reaction from the API report,” said Olivier Jakob, oil analyst at Petromatrix, of oil’s rally. “There is a risk that the DOE will not show a stock draw of the same magnitude.”
Oil also benefited from a boost in risk appetite in global markets, as investors were cautiously optimistic about a “Remain” vote in the EU referendum on Thursday.
“Though some may be forgiven for thinking that the outcome is a foregone conclusion, the inconsistency between the betting money and the polls means that conditions are ripe for a fresh bout of volatility,” said Stephen Brennock of oil brokers PVM.
Riskier markets also drew support from Federal Reserve Chair Janet Yellen’s cautious comments on the US economy the previous day, in which she virtually ruled out a July rate rise.
The dollar fell against a basket of currencies. A weaker dollar makes oil cheaper for other currency holders and tends to support oil prices.
The drop in US crude inventories would be the fifth straight weekly decline and adds to signs that a supply glut that has halved oil prices in the last two years is easing.
Other signs include lower US shale oil production due to reduced investment in the wake of the price collapse, underpinning a wider drop in non-OPEC supply in 2016.
