Oil edges lower as strong dollar, economic concerns weigh

[July 06, 2016]  By Karolin Schaps

LONDON (Reuters) - Oil prices edged lower on Wednesday, extending losses to a third straight session, as a stronger dollar weighed and economic concerns rose following Britain's vote to leave the European Union.

Investors also awaited data on U.S. crude inventories, delayed due to Monday's Independence Day holiday.

Global benchmark Brent futures were down 30 cents at $47.66 a barrel at 0852 GMT after a 4.1 percent drop on Tuesday.

U.S. crude traded at $46.35 a barrel, down 25 cents. The contract fell 5 percent to end at $46.60 on Tuesday.

"Oil once again is testing key support levels and the inventory report will be the next focus, especially the level of gasoline inventories," said Ole Hansen, commodity strategist at Saxo Bank in Copenhagen.

He told the Reuters Global Oil Forum that Brent was edging closer to the technical support level of $47 a barrel and U.S. crude was rapidly approaching its support level of $45.8.

The U.S. crude inventory data could change momentum if it shows another stock draw as an indicator that a supply glut is starting to ease.

A Reuters poll showed analysts expected weekly U.S. commercial oil stocks to have fallen for a seventh consecutive week, along with a probable drop in gasoline stockpiles.

They forecast a 2.5-million-barrel draw in crude stocks and a 1.2-million-barrel fall in gasoline inventories.

The American Petroleum Institute (API) releases its data a day later than normal on Wednesday at 4:30 p.m. EDT (2030 GMT), while data from the U.S. government's Energy Information Administration (EIA) is delayed to Thursday at 11 a.m. EDT (1500 GMT).

A pump attendant works at a Petronas petrol station outside Kuala Lumpur, Malaysia, March 1, 2016. REUTERS/Olivia Harris

The U.S. dollar rose against a basket of currencies, trading up 0.1 percent.

"You have the dollar strengthening, risk aversion rising because of the ongoing Brexit saga and then there are the actual supply and demand aspects to consider," Fawad Razaqzada, market analyst for forex.com, said in a note.

Britain's decision to exit the EU has caused concern about economic growth in the region.

The British pound slumped to a new 31-year low against the dollar early on Wednesday after three UK property funds were suspended in the face of a rush of redemptions from investors fearing a slump in British property values.

The Bank of England also took steps to ensure British banks keep on lending, by lowering the amount of capital banks must hold in reserve, as UK business confidence plunged.

(Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson)

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