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Oracle cloud Load Balancer to VM Security

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I have strange issue allowing Load Balancer to access virtual machine on private network in Oracle Cloud. If I allow 0.0.0.0/0 to access my virtual machine on port 80, load balancer (and machines public ip) works fine. If I set rule to 10.0.0.0/16 I can't access vm through load balancer (and machines public IP of course). LB and VM are on same VCN (10.0.0.0/16). Nginx in access logs shows 10.0.0.214 ip when accessing through load balancer (with 0.0.0.0/0 rule). I don't have any network security groups assign to LB or VM. Any ideas?

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