Oil price tumbles further on mounting fears Britain will vote to leave European Union

A maze of crude oil pipes and valves seen at the Strategic Petroleum Reserve in Freeport, Texas.
A maze of crude oil pipes and valves seen at the Strategic Petroleum Reserve in Freeport, Texas. PHOTO: REUTERS

NEW YORK (AFP) - Oil prices tumbled as fears mount about next week's vote in Britain on leaving the European Union, sending investors fleeing to the safety of the United States dollar.

With the British referendum just a week away, polls were showing the June 23 vote too close to call and momentum behind the "Leave" campaign.

A potential Brexit stoked concerns about a negative hit to the British economy and the EU, and the ripple effects throughout the weak global economy.

"The concern about the economic impact of Britain's possible exit from the EU is compounded by concern about economic growth in China. These are all having a negative impact on prices," said energy economist James Williams of WTRG Economics.

US benchmark West Texas Intermediate for July delivery slid to its lowest level in more than a month, US$46.21 a barrel, down US$1.80 from Wednesday's settlement.

 

In London, Brent North Sea crude for delivery in August, the international benchmark, sank US$1.78 to US$47.19 a barrel, the lowest close since May 9.

"Oil prices are falling today for the sixth day straight, making this their longest losing streak since February," said Commerzbank analyst Carsten Fritsch.

The dollar rose against the euro, Canadian dollar and the Swiss franc. A stronger dollar typically weighs on demand for dollar-priced crude oil.

Concerns about global oversupply remained in the market. "While we don't see specific news pointing to increased petroleum supply, we do see the anxiety over recent production losses from Canada and Nigeria easing to at least some degree, with surplus inventories still overhanging the market," Tim Evans at Citi Futures said Thursday.