Singapore | World oil prices dived in Asia today after early results of a historic vote showed Britain increasingly moving to bolting out of the European Union. Asian currency and stock markets swung wildly as the early results in the high-stakes referendum showed the camp favouring an exit leading those who want the country to remain.
Results from 200 of 382 local areas in the referendum gave Brexit a clear lead. The number of votes cast stood at 7.8 million for Leave, 51.69 per cent, compared to 7.3 million for Remain, or 48.31 per cent. Several world leaders have warned that a British exit, or Brexit, of the EU would lead to a recession with global spillover effects.
At around 0305 GMT, US benchmark West Texas Intermediate for August delivery fell USD 2.12, or 4.23 per cent, to USD 47.99 a barrel. Brent North Sea crude, which is traded in the European markets, was down USD 2.06, or 4.05 per cent, to USD 48.85 a barrel.
We are seeing oil swept up in the general market nervousness to the vote, Ric Spooner, a chief analyst at CMC Markets in Sydney, told Bloomberg News. Corrections are likely to be fairly shallow in oil because prices will be supported by the fact a balanced market is firmly on the horizon, he added. Foreign exchange markets are at the heart of the turmoil as traders ditch the pound and turn to the greenback and the yen, widely seen as safe haven currencies.
After reaching a 2016 high of $1.500 to the pound overnight, sterling had fallen new low of $1.381 at about 0245 GMT, a five-month low. With a stronger dollar, commodities like oil become more expensive for those holding other currencies, curtailing demand. Oil prices have fluctuated over the past week as the markets were on tenterhooks over yesterday’s vote. Prices have recovered some 80 percent since sub-USD 30 a barrel prices in February — on supply disruptions in Canada and Nigeria — but are still a way off from 2014 highs of more than USD 100 a barrel.