Indian crude oil basket gains $2 on calming of Brexit fears

The Indian basket of crude oils gained $2 per barrel over the weekend, closing trade on Monday at $47.24, as the US dollar weakened and stocks soared on growing expectations that Britain is likely to vote to remain in the European Union (EU) in the referendum on Thursday.

The Indian basket, composed of 73 per cent sour grade Dubai and Oman crudes and the rest by sweet grade UK Brent, closed trade on Friday at $45.17 per barrel of 159 litres.

The Brent crude for August delivery climbed back over $50 per barrel on Monday on the London ICE Futures Exchange, while the US West Texas Intermediate for July rose nearly 3 per cent to settle at $49.37 on the New York Mercantile Exchange.

The price of OPEC -- Organisation of Petroleum Exporting Countries -- basket of 13 crudes rose to $46.24 a barrel on Monday, from $44.18 on the previous trading day on Friday, according to the Vienna-based OPEC Secretariat.

The US dollar, in which oil is traded, lost value against most major currencies on Monday as the euro and British pound rallied after opinion polls swung in favour of the campaign for Britain to remain in the EU. The pound had its biggest one-day rise in seven years on the day.

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, while a third poll found that support for Brexit is ahead by a narrow margin.

The bullish outlook on the referendum outcome over the weekend has helped crude oil prices defy negative factors, such as the resumption of oil production in Canada after wildfires and a further increase in the number of active rigs in the US.

Oil prices have recently surged nearly 90 per cent, from a 12-year low in January, on a weaker US dollar.

OPEC, which accounts for 40 per cent of global crude output, said in a statement following its meeting in Vienna earlier this month when it decided against an output cut, that its members were committed to a "stable and balanced oil market and that the market is moving through the balancing process".

OPEC member Iran has been ramping up production to its pre-sanctions levels despite the recent supply glut, and this has been balanced by disruptions in Canada, Libya, Nigeria and Venezuela.

--IANS

bc/vd