Oil prices drop further on supply, Brexit fears

After almost doubling from February to touch multi-month highs last week, the commodity tumbled along with equities markets on worries about the global outlook and Britain’s EU future.

At about 0430 GMT, the US benchmark West Texas Intermediate (WTI) fell 69 cents, or 1.42 percent, to trade at $47.80, a one-month low. Brent fell 71 cents, or 1.42 percent, to $49.12, its lowest in three weeks.

WTI has fallen 7.5 percent from last week’s 11-month peak and Brent is down 5.5 percent from its eight-month high.

The selling pressure built up Tuesday when the International Energy Agency said in its monthly report that it expects global crude demand to grow this year and next but that huge inventories would cap future price gains.

“There is an enormous inventory overhang to clear,” the IEA said. “This is likely to dampen prospects of a significant increase in oil prices.”

That was followed by news that data from US industrial group the American Petroleum Institute show US inventories rose 1.2 million barrels last week, confounding forecasts of a fall.

Traders are awaiting the release of official US stockpiles figures later Wednesday, while the Federal Reserve is also due to conclude a two-day meeting. The Bank of Japan ends its own policy gathering Thursday, which will be closely followed to see if it introduces fresh stimulus measures.

Markets around the world are on edge over authorities’ ability to navigate a global slowdown, which is being exacerbated by a growing sense that Britain will vote to leave the EU. More than $2 trillion has been slashed from global equities in the past week.

With just over a week to the June 23 referendum, several polls have put the “Leave” campaign ahead, raising the prospect of one of its big three economies leaving the economic bloc — fuelling warnings of a rout across international markets.