(Corrects to clarify U.S. crude dropped intra-day, not from the
previous day)
* U.S. crude stocks down less than 1 mln barrels -EIA
* Reuters poll forecast 1.7 mln barrels, API 5.2 million
* Volatility expected ahead of Britain's EU referendum
* Discount for Dec 2016 U.S. crude widens vs Dec 2017
By Barani Krishnan
NEW YORK, June 22 (Reuters) - Oil prices slipped on
Wednesday after the U.S. government reported a
smaller-than-expected inventory drawdown, and as investors
fretted about Britain's upcoming vote on whether to stay in the
European Union.
Crude futures rose in early trading, with global benchmark
Brent and U.S. crude's West Texas Intermediate (WTI) both
trading above $50 a barrel at one point.
Prices headed lower after the U.S. Energy Information
Administration (EIA) reported a stockpile decline of 917,000
barrels for the week ended June 17. EIA/S
While it was the fifth consecutive weekly draw, the EIA's
number was smaller than a 1.7 million-barrel drawdown forecast
by analysts in a Reuters poll, and only about a third of the 5.2
million-barrel drop reported on Tuesday by trade group the
American Petroleum Institute (API). API/S
Brent's front-month contract, August LCOc1 , settled down
74 cents, or 1.5 percent, at $49.88 a barrel.
U.S. crude futures CLc1 initially rose to a session high
of $50.22 a barrel before slipping to a settlement of $49.13,
though were still up slightly versus the previous close of
$48.85.
Further out, the discount for WTI for December 2016 versus
December 2017 CLZ6-Z7 widened to as much as $1.81 a barrel,
its biggest discount in six weeks. Traders said they believed
producers were responsible for the move, as they were probably
locking in 2017 prices CLYstc1 at above $52. The discount
encourages investors to store oil for later delivery due to
better forward prices.
The huge draw reported by the API had boosted crude late on
Tuesday, after prices had settled lower for the day.
The oil market was also buzzing on Wednesday over this
week's unusually large volumes in complex crude options on bets
the market will likely tumble by early next year. draw reported by the EIA is "decidedly bearish", said
Troy Vincent, analyst at New York-based crude cargo tracker
ClipperData. He expected WTI to "move back below $49 this week",
citing worries over gasoline and distillate inventories too.
U.S. gasoline demand over past four weeks rose 3.9 percent
year-on-year, but stocks of the motor fuel rose 627,000 barrels
last week, while distillates grew 151,000 barrels.
Investors also braced for more market swings due to currency
market gyrations on speculation over Britain's referendum on the
EU on Thursday. The U.S. dollar's moves help determine demand
for oil among holders other currencies.
"In any event, our perception of a choppy/sideways trading
affair within about a $5-6 range per nearby WTI and Brent
remains unchanged," Jim Ritterbusch of Chicago-based oil markets
consultancy Ritterbusch & Associates said in a commentary. He
advised a neutral position on oil until the referendum.
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CHART: Brent oil to rise to $51.46 http://tmsnrt.rs/28NKaFI
CHART: U.S. oil may test resistance at $51.85 http://tmsnrt.rs/28MhD3D
CHART-U.S. oil production is falling http://tmsnrt.rs/28NJgZS
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