Oil Extend Gains for Second Straight Day on Easing Brexit Fears

WTI crude oil is seen extending its rebound for second straight session, from a multi-week through level of $45.81 touched last week and now seems to be heading back towards $49.00 handle.

Receding worries of a Brexit is denting the US Dollar’s safe-haven demand, thus benefiting dollar-denominated commodities like oil. Global risk appetite got a boost after several weekend polls on Thursday’s crucial UK-EU referendum showed the ‘Remain’ camp regaining some lost ground. A dramatic shift towards a more supportive stance for the ‘Remain’ camp is seen as a reaction to last Thursday’s tragic murder of a pro-EU MP Jo Cox.

The latest BMG poll (conducted over the phone) showed ‘Remain’ camp leading with 53.3% votes vs 46.7% votes for ‘Leave’. In a separate pool conducted by Opinium showed an even result of 44% for both ‘Leave’ and ‘Remain’ camps. As per YouGov, 43% want to Leave and 44% voted to Stay. Lastly, the Survation poll showed 42% supporting to ‘Leave’ and 45% support for the pro-EU ‘Remain’.

Last week, the black gold continued with its reversal from its highest level since July 2015 before finding renewed buying interest on Friday after the OPEC Secretary General, Mohammed Sanusi Barkindo, hinted towards calling for an emergency meeting of member countries to discuss production cut / freeze in order to restrict sharp decline in crude oil prices.

Moreover, rising expectations of the UK remaining within the EU also helped crude prices to negate renewed worries over global supply glut, after resumption of oil production in Canada, and data showing increase in the number of active oil rigs in the US for third consecutive week.

Apart from the Brexit referendum, Tuesday’s final trade data from world’s largest consumer of commodities, China, and the weekly US crude production along with weekly crude oil inventories data on Wednesday, will also attract a lot of traders’ attention.

In the meantime, traders will take cues from risk sentiment and developments surrounding Thursday’s key UK-EU referendum, which remains the biggest near-term fundamental trigger and key overhang on the global financial markets.

From technical perspective, momentum above $49.00 round figure mark is likely to boost the commodity further with immediate strong resistance pegged near the very important $50.00 psychological mark. A sustained move back above $50.00 handle would pave way for resumption of the near-term bullish trajectory, assisting it back towards multi-month highs resistance near $51.50 level. Conversely, weakness back below $48.00 level seems to exert further pressure on prices, dragging it back towards $47.20-$47.00 support region before heading back to a 5-week lows support near $46.00-$45.80 touched in the previous week.