06 July 2016, London — Oil edged lower on Wednesday, extending losses to a third straight session, as investors grew concerned over consumption due to weaker demand from refineries and potentially slower economic growth after Britain’s decision to leave the EU.
Despite record demand from drivers across the United States, an excess of gasoline worldwide has weighed on refineries’ profitability, leading some to cut runs and throwing the demand for crude oil in doubt.
Investors also awaited data on U.S. crude inventories, delayed due to Monday’s Independence Day holiday.
Global benchmark Brent futures were down 75 cents, or 1.6 percent, at $47.21 a barrel at 1136 GMT after a 4.1 percent drop on Tuesday.
U.S. crude traded at $45.96 a barrel, down 64 cents or 1.4 percent. The contract fell 5 percent to end at $46.60 on Tuesday.
“Oil once again is testing key support levels and the inventory report will be the next focus, especially the level of gasoline inventories,” said Ole Hansen, commodity strategist at Saxo Bank in Copenhagen.
He told the Reuters Global Oil Forum that Brent was edging closer to the technical price graph support level of $47 a barrel and U.S. crude was rapidly approaching its support level of $45.8.
Analysts at Petromatrix said if WTI breaches this level, the next support test will be at $43.
The U.S. crude inventory data could change momentum if it shows another stock draw as an indicator that a supply glut is starting to ease.
A Reuters poll showed analysts expected weekly U.S. commercial oil stocks to have fallen for a seventh consecutive week, along with a probable drop in gasoline stockpiles.
They forecast a 2.5-million-barrel draw in crude stocks and a 1.2-million-barrel fall in gasoline inventories.
The American Petroleum Institute (API) releases its data a day later than normal on Wednesday at 4:30 p.m. EDT (2030 GMT), while data from the U.S. government’s Energy Information Administration (EIA) is delayed to Thursday at 11 a.m. EDT (1500 GMT).
Britain’s decision to exit the EU has caused concern about economic growth in the region.
The British pound slumped to a new 31-year low against the dollar early on Wednesday after three UK property funds were suspended in the face of a rush of redemptions from investors fearing a slump in British property values.
*Karolin Schaps; Libby George & Aaron Sheldrick; Editing – Dale Hudson & William Hardy – Reuters