NYMEX, Brent fall in Asia as sentiment weakens on Brexit, demand views

Investing.com - Investing.com - Crude oil prices reversed course and fell in Asia on Tuesday in thin trade with many countries on holiday to mark Eid al-Fitr in the region and elsewhere, but sentiment dampened on concerns linked to Brexit and weak demand prospects.

On the New York Mercantile Exchange, WTI crude for August delivery fell 0.79% to $46.23 a barrel. On the Intercontinental Exchange (ICE), Brent crude for September delivery dropped 0.77% to $47.95.

The American Petroleum Institute will release its data a day later than normal on Wednesday at 4:30 p.m. EDT (2030 GMT), while the EIA's data is also delayed to Thursday at 11 a.m. EDT (1500 GMT). On Wednesday, the U.S. Department of Energy is expected to show that crude stocks declined 2.5 million barrels in the week ended July 1.

Overnight, crude futures fell sharply on Tuesday in the worst one-day decline in a month, as investors responded to reports of an unexpected build at the Cushing Oil Hub in Oklahoma, reigniting longstanding concerns related to the global supply glut on global energy markets.

Data intelligence firm Genscape, Inc. reported a build of 230,026 barrels last week at Cushing for the week ending on July 1. Supply levels at Cushing, the main delivery point for NYMEX oil, have lingered near full storage capacity for the majority of the last year. Any major supply builds at Cushing, the largest storage facility in the U.S., are viewed as extremely bearish for oil prices.

While global supply has outpaced demand by approximately 1 million barrels per day throughout the calendar year, there have been indications that Non-OPEC production may continue to wane, as oil prices continue to hover sharply below their peak of $115 a barrel in June, 2014. Last week, U.S. crude production dropped by 55,000 barrels per day to 8.622 million bpd, moving lower for the 22nd time over the last 23 weeks. By comparison, domestic production peaked at 9.6 million bpd at this time last year, its highest level in four decades.

Elsewhere, investors continued to pile into government bonds and other safe-haven assets on Tuesday, amid broad signals of weakening global economic growth.

During Tuesday's session, M&G's Property Portfolio, Britain's largest commercial property fund, also halted redemptions following a rash of rapid cash outflows, providing further signals of an oncoming recession in the U.K.

At the same time, GBP/USD slid below 1.30 for the first time since 1985, while the yield on the U.S. 10-Year plunged to an intraday-low of 1.357, its lowest level on record. The threat of a recession throughout the euro area could restrain demand for crude in the U.K. Continental Shelf (UKCS), home to approximately 590,000 bpd of daily crude production.