Oil prices slipped by 1% on Wednesday due to the US government’s recorded inventory drawdown and investor’s nervous anticipation for Britain’s referendum, Brexit, on whether or not to remain in the European Union.

Crude futures rose in early trading, seeing the international benchmark and US crude West Texas Intermediate (WTI) trading at more than $50 a barrel at a given point.

US gasoline demand has increased over the past four weeks. Credit: Aspire

During the fifth weekly draw, at the end of the week of June 17, the U.S. Energy Information Administration (EIA) reported 917,000 barrels fall. Simultaneously, the draw was smaller than the drawdown analysts had initially forecasted at 1.7 million-barrel and significantly lesser than the 5.2 million-barrel the trade group American Petroleum Institute had recorded on Tuesday.

Troy Vincent, an analyst at New York-based crude cargo tracker ClipperData, stated that today’s report was bearish, following the huge draw the API had reported on Tuesday after prices had settled lower for the day.

Vincent went on to note that even though the gasoline demand is still relatively high, in relation to the previous year, a build to both gasoline and distillate inventories could not predict the product prices well. As a result, he expects the WTI to return to below $49 this week.

On that note, August Brent Crude settled at a lessened 74 cents, or 1.5%, at $49.88 a barrel on London’s ICE Futures exchange. August WTI fell 72 cents, or 1.4%, settling at $49.13 on the New York Mercantile Exchange.

US gasoline demand has increased over the past four weeks by 3.9% year-on-year, while motor fuel stocks grew 627,000 barrels last week and distillates rose 151,000 barrels.

According to Market Watch, these reports demonstrate “a mixed bag of data,” as MarJohn Macaluso, analyst at Tyche Capital Advisors said.

Investors have witnessed the dollar fluctuate due to the uncertainty of whether or not Britain will remain in the European Union. In a wave of optimism that Britain will, in fact, remain in the EU, the crude prices have slightly increased early in the session.

The US economy Federal Reserve Chair, Janet Yellen, decided against an interest hike in July which, apart from the Bretix speculation, contributed to the weakening of the greenback on Wednesday against a basket of currencies.

In global crude affairs, major crude exporter Saudi Arabia plans to play its role as demand and supply mediator as soon as the global market for oil recovers, while a trend is starting to form in Nigeria where some supply seems to be making its way back.

Source: Business Recorder