Oil up as Brexit Chances Dim, Cushing Stock Draw

Deep ocean oil rig FBN

Oil prices rose more than 2 percent on Monday, a second straight day of gains, as polls showing a lower likelihood of Britain leaving the European Union weakened the dollar, boosting commodities priced in the U.S. currency.

Data from market intelligence firm Genscape pointing to a drawdown of 568,213 barrels at the Cushing, Oklahoma delivery base for U.S. crude futures in the week to June 17 also helped sentiment, said traders who saw the numbers.

Brent crude futures' front-month contract, August, rose $1.13, up 2.3 percent, to $50.30 a barrel by 11:25 a.m. EDT (1525 GMT). The contract has risen more than 6 percent since Thursday's settlement, after falling 10 percent in six previous sessions.

U.S. crude's West Texas Intermediate (WTI) futures gained $1.25, or 2.6 percent, at $49.23 a barrel in its July front-month. But the contract, which expires on Tuesday, was barely traded, with volume flocking to nearby August, which will be the next front-month for WTI.

Three opinion polls ahead of Thursday's vote on Britain's future in the EU showed the 'Remain' camp recovering some momentum, although the overall picture was of an evenly split electorate. Traders said Britain's exit, or "Brexit," would cause economic turmoil to Europe and beyond.

The pound climbed 2.3 percent to $1.4682 against the dollar. A weaker dollar makes commodities denominated in the greenback more attractive for other currency holders.

Analysts said oil prices should stay firm as long as a Brexit looked unlikely, although a strong rally may be difficult absent more supply outages like those out of Nigeria and Canada that boosted the market to the 11-month highs of over $50 earlier this month.

"We are not expecting sustained crude price strength back to above the $50-51 area in either WTI or Brent as fundamentals appear to be undergoing a very gradual shift back toward the bearish side," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.

Scott Shelton, energy futures broker with ICAP in Durham, North Carolina, said he was not impressed by the four weeks of continuous U.S. crude stock draws, considering Nigerian outages, Canada outages and subtracting the French strike effect.

"I guess I am still not ready to join the bulls at this point and I am somewhere between bearish and no view and waiting for some clarity," Shelton said.

(By Barani Krishnan; Additional reporting by Amanda Cooper in LONDON; Editing by Marguerita Choy)