Last week we mentioned the impending vote about whether Britain will stay or leave the EU, otherwise known as “Brexit.” Being that the vote is slated for this Thursday, it is unsurprisingly effecting the market today. Opinions have grown stronger this morning in favor of the UK remaining part of the EU, which has the US Dollar index tumbling lower and in turn has the crude market strengthening. WTI has gained $1.34 this morning to $49.32, and both refined products RBOB and HO are up $.0596 and $.0382 respectively.
Big business is clearly in favor of Britain staying in the EU because of the ease and ability to move products, people, and of course money around the EU and around the world. If the Leave Party prevails, a Brexit will indeed have an effect on the oil market, however it may only be small and short-lived. A short term wave of risk-aversion will shower the market immediately upon a Brexit, according to CNBC, which is bearish for crude oil. However, the global crude market, in recent weeks, has portrayed signs of re-balancing. Global demand is believed to be chipping away at the supply gut, which would likely over-power any hiccup resulting from a Brexit.
In other news:
- Investors reduce bets of rising oil prices as Canadian oil sands production continues to ramp up as fires diminish. The IEA believes Canadian output will return to normal by the middle of July.
- Baker Hughes reported last Friday another weekly increase (9 rigs) which brings the total online number to 337.
- Vladimir Putin is contemplating selling part of Rosneftegaz OJSC, an oil gas and coal company headquartered in Moscow, to China and India for nearly $11 billion.
- Chicago Spot market RBOB, as well as CBOB, has been taken on a rollercoaster ride over the past 15 sessions. After peaking roughly 50cts/gal over the NYMEX on June 8th, it has come off nearly 37 cts/gal. A true sign that regional supply issues are dissolving.