Oil prices dipped on Tuesday on more speculation over Britain's future in the European Union, then pared losses to settle off session lows as a US refinery outage triggered a rebound in gasoline prices. Royal Dutch Shell Plc shut its gasoline-producing fluidic catalytic cracking unit at the 316,600 barrel per day (bpd) Deer Park, Texas refinery. Gasoline futures, which had been down, rebounded into positive territory.
Crude futures pared losses as gasoline rebounded. Oil had dropped as much as 2 percent earlier as investors took profits on a two-day rally fed by speculation that Britain would not leave the European Union after a referendum this Thursday. "The Deer Park news was certainly supportive to the market," said David Thompson, executive vice-president at Washington-based commodities broker Powerhouse. "The evolving 'stay' view for Britain in the EU and mounting troubles for Venezuela were other positives for oil."
Brent crude futures' front-month, August, settled down 3 cents at $50.62 a barrel, after falling more than $1 to a session low of $49.46. The contract had gained 7 percent in the last two sessions. US crude futures' expiring July front-month contract closed down 52 cents, or 1 percent, at $48.85 a barrel, versus a session low at $48.16. The more actively-traded August contract, the new front month from Wednesday, settled down 11 cents at $49.85.
Oil investors worried about the possibility of global crude supplies tightening from the economic crisis in Venezuela. Output from Venezuela, which sits atop the world's biggest oil reserves, was 2.37 million barrels per day (bpd) in May, down 5 percent from April and 11 percent from last year's average, according to Opec data. Crude futures also got brief support from news that rebels sabotaging Nigeria's crude exports had denied agreeing to a one-month cease-fire.
The Niger Delta Avengers' denial came after government officials told Reuters a truce had been struck with the group last week after talks involving Nigeria's oil minister, community groups and state governors in the Niger Delta, which produces most of the country's crude. Investors will watch for weekly US crude inventory data due from trade group American Petroleum Institute at 4:30 p.m. EDT (2030 GMT). An updated Reuters poll forecast that US crude stockpiles fell 1.7 million barrels last week, declining a fifth week in a row. The US government will issue official inventory data on Wednesday.
Oil prices had dropped early in Asian trade after a strong two-day rally that was fed by easing concerns Britain would leave the European Union after a referendum this week, allowing market participants to focus on supply issues. Two opinion polls on Monday suggested support for Britain staying in the EU had recovered some ground following the murder of a pro-EU lawmaker last week, although a third survey found backers of "Brexit" ahead by a whisker. Analysts fear a British departure would cause global economic turmoil.
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