The big gains and losses in online stock trading are shaped by major global political events, such as the recent earth-shaking Brexit poll.
Brexit Shakes Oil Stocks
Brexit has affected stocks and raised uncertainty. Crude prices are among those that are the most affected. Crude oil prices slumped on Friday, the 24th of June 2016 after the majority of Britain’s citizens voted to exit Europe. By mid-Friday, oil had slumped 4.5% and below $50 per barrel. British stocks followed suit. Royal Dutch Shell (NYSE: RDS-A) and BP (NYSE: BP) had slumped by over 5%. Total (NYSE: TOT) was down nearly 9% and Statoil (NYSE: STO) was down nearly 6%. Independent oil companies in the US such as ConocoPhillips (NYSE: COP) were also sliding in line with the crude oil prices.
This impact on crude oil contributed to the uncertainty of the Brexit referendum. The market is still figuring out what impact this would have on the consumption of oil in the UK and internationally. While Britain may not be a major oil consumer, the EU consumes around 11.1 million barrels each day. That makes the European Union second behind China in oil consumption. That’s why the concern rises on the risk of contagion, that other EU countries could be inspired by Britain to leave the EU and cause further economic disruptions which could further lower the demand for energy.
Future Uncertainties for Oil Producers
Additionally, companies functioning in Europe and Britain do face the uncertainty of what to do. Multinationals could face trouble in finding employees. Companies may have to relocate their operations away from Britain, though BP has promised to maintain its London headquarters in spite of the Brexit vote. However, BP and other companies could face trouble in transferring their UK employees to various international locations when the UK finally parts from the EU.
The other concern involves production of oil and gas in the North Sea of the UK. Many producers including ConocoPhillips, Royal Dutch Shell, BP, Statoil and Total have offshore rigs functioning in the region. If the UK passes new laws, they could negatively affect the oil sector.
Unexpected Outcome but Long Term Adverse Effects Unlikely
One of the reasons why the uncertainty has soared up is because world markets were not expecting this outcome from the referendum, as it was widely predicted that Britain’s citizens would vote for the nation to continue to be part of the EU. Now they fear big change. And this fear could adversely affect crude oil prices for some time. It would take some time for the market to adjust to the new situation.
But the fear can be made to subside, though, with the thought that since there isn’t any major reduction in oil demand, the outcome of the Brexit referendum is unlikely to have any long-term impact on the oil sector.
Stay on top of news such as this and be prepared to make decisions accordingly. It is one of the keys to success in online stock trading. And helping you all the way through would be TradeZero. Call us at +1 954-944-3885 or email firstname.lastname@example.org.
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