Oil up 2 percent after two-day drop; caution still on gasoline, Brexit

Wed Jul 6, 2016 3:23pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices rose almost 2 percent on Wednesday as robust U.S. economic data lifted crude futures from two days of declines, although a gasoline glut and woes from Britain's European Union exit suggested more pressure ahead.

The pace of growth in the U.S. service sector was the fastest in seven months in June, an industry report showed.

The data alleviated some concerns about the impact of Brexit on global growth, boosting share prices on Wall Street and crude futures, which were down about 5 percent in the past two days. [.N]

Brent crude settled up 84 cents, or 1.8 percent, at $48.80 a barrel. U.S. crude futures gained 83 cents, or 1.8 percent, to settle at $47.43.

Oil prices also rose in anticipation that the U.S. government will report on Thursday a seventh straight weekly drop in crude stockpiles. A Reuters poll estimated a drop in crude inventories of 2.3 million barrels for the week ended July 1.

The American Petroleum Institute (API) will issue its own report on domestic oil stockpiles at 4:30 p.m. EDT (2030 GMT), before Thursday's official data.

"Big selloffs before oil statistics have a tendency to get some correction and that's what we saw today," said Pete Donovan, broker at Liquidity Energy in New York.

Crude futures fell earlier on worries of U.S. gasoline over supplies.   Continued...

A pump attendant works at a Petronas petrol station outside Kuala Lumpur, Malaysia, March 1, 2016.  REUTERS/Olivia Harris