Oil slides on the back of Brexit, loses $1.08
• NSE indices dip further by N278b
The exit of the United Kingdom from the European Union (EU) is already taking its toll on the global oil economy, even as more and more young Britons insist on reversing the outcome of last Thursday’s referendum.
Oil, yesterday, slid for a second session, extending losses to seven per cent as the commodity was caught in a wave of risk aversion.
Considering the fact that UK consumes less than two per cent of global oil supplies — and the EU, 15 per cent — a strengthening U.S. dollar weighed across commodities priced in the currency, according to the Financial Times of London, which yesterday posited that Brexit and broad financial turmoil risked economic slowdown, especially in the U.S. and Asia.
Analysts had said that Brexit would have less than significant impact on global demand but Brent crude — which serves as international oil marker — fell by 2.2 per cent (as much as $1.08) to $47.25 a barrel as the dollar index rose one per cent and the pound fell to its lowest level since 1985.
Financial Times reports that the U.S. oil benchmark, dipped $1.31, or 2.7 per cent, to $46.50, quoting Adam Longson, an analyst at Morgan Stanley, as saying that “Crude oil has simply traded in line with the strength of the US dollar. “We see no evidence of the market discounting greater demand risk as of yet.”
It also quotes Giovanni Staunovo, an analyst at UBS wealth management, as saying, “The UK’s vote to leave the EU could reduce global oil demand growth by around 100,000 b/d this year and next. “This fall needs to be seen in the context of global oil demand totalling 96m b/d.”
Yet, according to global energy forecasters — the International Energy Agency — oil demand is expected to grow 1.3m b/d this year, contributing to a rebalancing of the market later in 2016.
Also yesterday, transactions on the floor of the Nigerian Stock Exchange (NSE) re-opened on a downward note as major blue chip companies incurred losses just as market indices depreciate further by N278 billion.
Specifically, at the close of trading yesterday, the All Share Index fell by 2.64 per cent to 29840.23 points from 30649.66 points traded on Friday.
Also market capitalisation of listed equities shed N278 billion to N10.248 trillion from N10.526 trillion recorded on Friday.
Analysts attributed the drop in indices to profit-taking and exit of Britain from the EU. According to them, the global market is reacting to Brexit.
They urged investors not to panic over the development but should target valuable stocks with huge upside potentials to increase their portfolio.
At the close of business, investors traded 375.221 million shares worth N4.027 billion in 4229 deals against 444.512 million shares valued at N3.712 billion which exchanged hands Friday in 5565 deals.
Further analysis of yesterday’s transactions showed that Total Nigeria Plc led gainers’ table growing by N5.00 to close at N200.00 per share while Julius Berger followed with a gain of N2.20 kobo to close at N46.20 per share.