Investing.com -- Crude futures closed near one-month lows amid extreme volatility, as markets reacted to a surprising decision by voters in Britain to approve a referendum that could trigger the U.K.'s departure from the European Union.
On the New York Mercantile Exchange, WTI crude for August delivery traded between $46.75 and $50.44 a barrel before closing at $47.64, down 2.47 or 4.93% on the session. On the Intercontinental Exchange (ICE), brent crude for August delivery wavered between $47.55 and $51.19 a barrel, before settling at $48.38, down $2.53 or 4.97% on the day. After rallying slightly in the U.S. morning session, crude settled near session-lows as selling pressure intensified in the final minutes before the close. The U.S. crude settlement was delayed slightly following the late swing in prices, Reuters reported.
As the Leave campaign took a resounding lead in the wee hours of Friday morning, both the international and U.S. benchmarks of crude tumbled more than 6%, falling to their lowest levels since mid-May. With the considerable losses, the front month contract for crude erased all of their gains from the last week when they surged more than $4 a barrel.
On Friday morning, U.K. prime minister David Cameron announced intentions to step down by October after polls showed that the Exit camp prevailed by a 52-48% margin. Leading up to the historic referendum, a host of major oil companies issued stark warnings on the dire implications of a UK departure. Besides complicating the free travel arrangements by UK workers employed by euro area oil companies, oil executives have expressed concern on the impact of heightened trade barriers between the UK and other top countries in the the EU. Consequently, large sums of UK oil workers could require non-EU citizenship to work abroad, a development, which could increase operating costs for top energy companies.
Other industry insiders, such as former BP (LON:BP) CEO John Browne, said in the final hours before polls closed that the cost of uncertainty from leaving could be so high that the U.K. may never recover. In late-May, The Telegraph reported that North Sea brent oil created an annual loss for U.K. taxpayers for the first time since the Treasury began maintaining an oil balance sheet in 1968. Leading economists also warned that a Brexit vote could tip the euro area into recession, dampening demand for oil.
Elsewhere, oil services firm Baker Hughes said in its weekly rig count report that U.S. oil rigs fell by seven to 330, marking its first decline in four weeks. The combined oil and gas rig count fell by three to 421.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 2.5% to a three-month high at 96.70, before falling back to 95.59 in U.S. afternoon trading. The index posted its strongest one-day move in more than five years.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.