Oil slides 4 percent on worry of market turmoil if UK leaves EU

An oil pumpjack is seen in Velma, Oklahoma U.S. April 7, 2016. REUTERS/Luc Cohen

Oil prices slumped about 4 percent and hit one-month lows on Thursday, settling down for a sixth straight day, on fears of global economic turmoil if Britain exits the European Union.

It was the longest slide for oil since early January, when prices fell seven days in a row before hitting 12-year lows below $30 a barrel on worries about a global crude glut.

This time around, a resurgent dollar is hammering crude futures and other commodities on speculation that Britain could vote to end its EU membership.

The dollar .DXY hit two-week highs, then eased back on the sterling’s GBP= strength as Britain suspended campaigning over its EU membership status after a deadly attack on a Member of Parliament.

Oil pared losses as the sterling rose, but crude tumbled again in post-settlement trade to reach new lows on the day.

Brent crude futures’ front-month contact LCOc1 settled down $1.78, or 3.6 percent, at $47.19 per barrel. In post-settlement trade, it fell to as low as $46.94, its lowest since May 12.

Brent has lost about $5 a barrel, or around 10 percent, over the past six sessions. Prior to that, it hit an eight-month high of nearly $53 on supply disruptions out of Nigeria and Canada.

The front-month in U.S. West Texas Intermediate (WTI) crude futures CLc1 settled down $1.80, or 3.8 percent, at $46.21 a barrel. It got to a May 13 low of $45.91 after the close.

Drawdowns in U.S. crude inventories over the past month have not provided much support to oil with investors focused more on a possible rise in production as Brent and WTI traded above $50 a barrel each. U.S. energy firms added rigs drilling for oil for a second week in a row last week.

“While oil is obviously getting swept up in the bearish tide of declining equities, falling bond yields and firming dollar, we also see a gradual turn in global oil balances more conducive toward $45 crude than levels above $50,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.

The Energy Information Administration said on Wednesday domestic crude inventories USOILC=ECI fell 933,000 barrels last week, less than half the 2.3-million-barrel decrease forecast.

On Thursday, market intelligence firm Genscape reported a weekly decline of 76,317 barrels in stockpiles at the Cushing, Oklahoma delivery point for WTI futures, traders who saw the data said. In the previous week, Genscape reported a drawdown of 299,058 barrels at Cushing.