Oil prices fell in Asian trade after a strong two-day rally that was fed by easing concerns Britain would leave the European Union after a referendum this week, allowing market participants to focus on supply issues.
U.S. crude’s expiring July front-month contract CLN6 was down 41 cents at $48.96 a barrel at 0650 GMT. The more actively traded August contract CLQ6, the new front-month from Wednesday, was down 41 cents at $49.55. That contract settled up nearly 3 percent at $49.96 on Monday.
Brent crude futures’ August front-month contract LCOc1 was down 52 cents at $50.13 a barrel.
On Monday, it climbed $1.48, or 3 percent, to $50.65 a barrel. The contract has risen about 7 percent since Thursday’s settlement, after dropping 10 percent in six previous sessions.
Two opinion polls released on Monday suggested support for Britain staying in the European Union had recovered some ground following the murder of a pro-EU lawmaker last week, although a third survey found backers for a “Brexit” ahead by a whisker.
While concerns over a British exit fade into the background, however briefly, supply issues are back in focus.
Saudi Arabia’s crude oil exports dropped in April despite high production levels, suggesting its battle for market share against U.S. shale drillers may be running its course.
With oil prices up more than 30 percent this year, shale drillers are looking at turning the taps on again and have proved resilient beyond Saudi and OPEC expectations.
Prices approaching $60 a barrel may entice U.S. shale drillers to resume operations capping gains, Shintaro Ambe, an executive vice president in charge of energy at Japanese trading company Mitsui & Co told shareholders at an annual meeting on Tuesday in Tokyo.
“We expect oil prices to gradually rise over the mid- to long-term, but we don’t expect prices to reach $100 a barrel quickly as they did three years ago,” he said in response to a question from a shareholder on the outlook for crude.
Potentially adding to supply, Iran has increased its crude export capacity at its main terminal on Kharg Island to allow eight tankers to load simultaneously, the oil ministry’s news agency Shana reported on Monday.
Meanwhile, Nigeria’s naira NGN=D1 slumped 30 percent against the dollar on Monday after the country’s currency peg was removed to alleviate the chronic foreign currency shortages choking growth in Africa’s biggest economy and major oil exporter.

How The Brexit Vote Will Impact Oil Prices
British voters are set to vote this week on whether to stay within the European Union or to break up and go it alone. Although the vote and the campaign largely focuses on highly controversial issues like immigration, the result could have profound implications for the global oil markets.
The connection between the Brexit vote and oil prices is not obvious on its face, but some oil analysts see the UK leaving the EU as a huge threat to the faltering oil price rally.
In short, a “Leave” vote will likely cause oil prices to fall this week.
For evidence of this view, look no further than the horrific events last week in the UK, when a British MP was slain by an attacker who reportedly yelled “Britain First.” Following the shocking event, both sides of the Brexit debate suspended the campaign, and the markets responded by bidding up global equities and commodities on the belief that British voters would be revolted by the news and vote to remain within the EU. Oil prices surged by 4 percent on June 17.
But the events are highly fluid and the outcome is far from assured. That makes the June 23 vote an important catalyst for short-term crude movements. A vote to remain would strengthen the sterling at the expense of the dollar, pushing up oil prices. A Brexit would have the opposite effect.
There are also some long-term, if vague, implications for crude oil if the UK leaves. A Brexit increases the political instability in Europe, which is bearish for commodity demand. “If the Brits vote to leave, other nationalistic voices in Europe could grow louder, leading to more referendums across Europe—and that is a negative scenario for oil demand in the longer term,” Tamas Varga, an analyst at London oil brokerage PVM, told the WSJ.
The debate on whether or not the UK should leave is highly divided, but for oil bulls, the preference should be clear.

Source: Reuters, Oilprice.com, 21 June 2016