Oil slips after small U.S. drawdown; seen choppy before Brexit vote
By Barani Krishnan
NEW YORK (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, settled down 74 cents, or 1.5 percent, at $49.88 a barrel.
U.S. crude futures 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 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 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. Continued...