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UPDATE 9-Oil slides as rising chance of Brexit spooks investors

Published 2016-06-14, 01:03 p/m
© Reuters. UPDATE 9-Oil slides as rising chance of Brexit spooks investors
LCO
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CL
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DE10YT=RR
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* Oil prices down for 4th straight day
* IEA sees oil market balance in 2016
* Brexit camp has "significant lead" ahead of EU vote -poll
* Coming up: API's U.S. oil inventory data at 4:30 p.m.
(2030 GMT)

(Adds API data expectations, changes quote, updates prices)
By Devika Krishna Kumar
NEW YORK, June 14 (Reuters) - Oil prices fell more than 1
percent on Tuesday, down for a fourth straight day, pressured by
investor nervousness over Britain's vote next week on whether to
leave the European Union, which overshadowed signs of a return
to health for crude after a two-year glut.
Safe-haven German Bund yields DE10YT=RR fell below zero
for the first time, while industrial commodities and equity
markets, seen as more vulnerable to economic risk, dropped after
polls showed Britain's "Leave" campaign leading ahead of the
June 23 vote on EU membership.
The referendum-related concerns eclipsed an upbeat forecast
for oil demand growth from the International Energy Agency,
which said the oil market is essentially balanced after two
years of surpluses. IEA/M On Monday, OPEC forecast that the
oil market would be more balanced in the second half of 2016 as
outages in Nigeria and Canada help to speed erosion of a supply
glut.
The market was awaiting direction from the American
Petroleum Institute (API) data later in the day that was
forecast to show U.S. crude inventories fell for a fourth
straight week. API/S
Brent crude oil futures LCOc1 fell 72 cents to $49.63 a
barrel by 12:49 p.m. EDT (1649 GMT), while U.S. crude futures
CLc1 lost 45 cents to $48.33.
"The market seems to be taking today's International Energy
Agency forecast in stride, despite both a minor upward revision
in demand and a reduction in non-OPEC supply," Tim Evans, energy
futures specialist at Citi Futures wrote in a note.
"Overall, the market doesn't seem to have been impressed,
taking the update as confirmation of known factors rather than
fresh bullish news."
The campaign for Britain to leave the EU has a "significant
lead" ahead of the referendum, and about 47 percent of likely
voters said they will opt to leave the EU, compared with 40
percent who want to stay, according to a poll of 2,497 people.

"This (the referendum) has rattled a lot of financial and
commodity trader/investors with money seemingly starting to flow
to the so-called safe-haven U.S. dollar until the dust settles
and the voting is concluded," said Dominick Chirichella, senior
partner at the Energy Management Institute in New York.
"The strong U.S. dollar versus most currency pairs is a
negative price directional driver for the oil complex."
If Britain voted to leave the EU, a prospect dubbed
"Brexit", investors fear the bloc could slip into recession,
which in turn could undermine oil demand.
The dollar .DXY has risen about 1.7 percent from its June
lows against a basket of currencies, spurred by Brexit fears.
Adding to the uncertainty in the markets was the ongoing
two-day U.S. central bank meeting.
"Not increasing interest rates would be interpreted as the
U.S. economy is not healthy enough for increasing interest
rates," a U.S. trader said.

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