Why does the Brexit cause a fall in crude oil prices?
"Uncertainty has very far reaching effects.   Oil is up ~100% since February and down ~40% from it's 52 week high (and down even more on a longer timeline).  It's not exactly a stable investment vehicle and moves a few percent each day on basically nothing.  A lot of securities will be bouncing around for the next couple weeks at least while folks remain uncertain about what the ""brexit"" will actually mean."
"I'll take a stab at this question and offer a disclosure: I recently got in RING (5.1), NEM (16.4), ASX:RIO (46.3), and FCX (8.2).  While I won't add to my positions at current prices, I may add other positions, or more to them if they fall further.  This is called catching a falling dagger and it's a high risk move. Cons (let's scare everyone away) Pros The ECB didn't engage in as much QE as the market hoped and look at how it reacted, especially commodities.  Consider that the ECB's actions were ""tighter"" than expected and the Fed plans to raise rates, or claims so.  Commodities should be falling off a cliff on that news. While most American/Western attention is on the latest news or entertainment, China has been seizing commodities around the globe like crazy, and the media have failed to mention that even with its market failing, China is still seizing commodities.  If China was truly panicked about its market, it would stop investing in other countries and commodities and just bail out its own country.  Yet, it's not doing that.  The whole ""China crisis"" is completely oversold in the West; China is saying one thing (""oh no""), but doing another (using its money to snap up cheap commodities). Capitalism works because hard times strengthen good companies.  You know how many bailouts ExxonMobil has received compared to Goldman Sachs?  You know who owns more real wealth?  Oil doesn't get bailed out, banks do, and banks can't innovate to save their lives, while oil innovates.  Hard times strengthen good companies.  This means that this harsh bust in commodities will separate the winners from the losers and history shows the winners do very well in the long run. Related to the above point: how many bailouts from tax payers do you think mining companies will get?  Zero.  At least you're investing in companies that don't steal your money through government confiscation. If you're like me, you can probably find at least 9 people out of 10 who think ""investing in miners is a VERY BAD idea.""  What do they think is a good idea?  ""Duh, Snapchat and Twitter, bruh!""  Then there's the old saying, ""Be greedy when everyone's fearful and fearful when everyone's greedy."" Finally, miners own hard assets.  Benjamin Graham used to point this out with the ""dead company"" strategy like finding a used cigarette with one more smoke.  You're getting assets cheap, while other investors are overpaying for stocks, hoping that the Fed unleashes moar QE!  Think strategy here: seize cheap assets, begin limiting the supply of these assets (if you're the saver and not borrowing), then watch as the price begins to rise for them because of low supply.  Remember, investors are part owners in companies - take more control to limit the supply.  Using Graham's analogy, stock pile those one-puff cigarettes for a day when there's a low supply of cigarettes. Many miners are in trouble now because they've borrowed too much and must sell at a low profit, or in some cases, must lose.  When you own assets debt free, you can cut the supply.  This will also help the Federal Reserve, who's been desperately trying to figure out how to raise inflation.  The new patriotic thing to do is stimulate the economy by sending inflation up, and limiting the supply here is key." "Not to mention that many oil fields don't make a profit below $40/barrel.  The Saudis over-produced on purpose based on that premise, betting that they could drive much of the growing North American production out of business by keeping the price below the point where tar sands and hydraulic fracking could be profitable.  If oil dropped to $10/barrel, few countries would bother pumping it.  While Saudi Arabia and some of the UAE could make a profit at that point (for now), even Iraq would be losing money.  https://www.fool.com/investing/2017/03/19/you-wont-believe-what-saudi-arabias-oil-production.aspx  That reduced production would drive the price right back up, since oil is still used in plastics, shipping, road construction, etc.  Even if every car being sold becomes electric overnight, *and* all the electric power plants become wind, nuclear or solar based tomorrow, we'd still have a decade or more of existing ICE cars on the road.  It's not the world would stop using oil in the next 6-8 years just because ""investment pours into electric cars"".  If anything, a drop to $10/barrel would slow the move away from oil significantly; what incentive would people have to buy a more expensive electric car when gas at the pump is suddenly is $1 again?" "Just to get the ball rolling, here's an answer: it won't affect you in the slightest. The pound happened to be tumbling anyway.  (If you read ""in the papers"" that Brexit is ""making the pound fall"", that's as valuable as anything else you've ever read in the papers.) Currencies go up and down drastically all the time, and there's nothing you can do about it. We by fluke once bought a house in Australia when that currency was very low; over the next couple years the currency basically doubled (I mean per the USD) and we happened to sell it; we made a 1/2 million measured in USD. Just a fluke. I've had the opposite happen on other occasions over the decades. But... Currency changes mean absolutely nothing if you're in that country. The example from (2) was only relevant because we happened to be moving in and out of Aus. My various Australian friends didn't even notice that their dollar went from .5 to 1 in terms of USD (how could it matter to them?) All sorts of things drastically affect the general economy of a given country. (Indeed, note that a falling currency is often seen as a very good thing for a given nation's economy: conspiracy theorists in the states are forever complaining that ) Nobody has the slightest clue if ""Brexit"" will be good bad or indifferent for the UK. Anything could happen. It could be the beginning of an incredible period of growth for the UK (after all, why does Brussels not want your country to leave - goodwill?) and your house could triple in value in a year. Or, your house price could tumble to half in a year. Nobody has the slightest clue, whatsoever about the effects on the ""economy"" of a country going forward, of various inputs." "once again: the problems you have commented about (i.e. decline of UK manufacturing and foreign policy) and your very crude version of historical causality, combined with the policy conclusions you have suggested (the need for common immigration and policy regime with the US) suggest to me that either you haven't quite grasped post-war euopean history, or you've ventured into the realm of conspiracy theory.   PS: ""when they're charismatically explained in such a systematic and specific way"" is not a phrase commonly used in english. explain what you mean by that, please." "This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-06-19/oil-s-slide-stalls-as-investors-weigh-stockpiles-against-libya) reduced by 70%. (I'm a bot) ***** &gt; The amount of oil stored in tankers reached a 2017 high of 111.9 million barrels earlier this month, according to Paris-based tracking company Kpler SAS. Oil has slipped below $45 a barrel as supplies in the U.S. remain plentiful and drillers continue to add rigs, raising concerns output cuts by the Organization of Petroleum Exporting Countries and allies including Russia won&amp;#039;t succeed in draining bloated stockpiles.  &gt; Crude stockpiles remain more than 100 million barrels above the five-year average, according to data from the EIA. American production has climbed to 9.33 million barrels a day through June 9, near the highest since August 2015.  &gt; Libya is pumping about 900,000 barrels a day, according to a person with direct knowledge of the matter, who asked not to be identified for lack of authority to speak to the media.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ietvj/oil_prices_are_tumbling_more_than_2_toward_43/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~148648 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **barrel**^#1 **percent**^#2 **August**^#3 **U.S.**^#4 **Oil**^#5" There's a concept called interest rate parity, which sort of says that you cannot profit on the difference in interest rates. This difference accounts for the predicted movement in exchange rates as well, along with the stability of the currencies. The British didn't choose to stay away, they were forced out (as was Sweden) by their fucked up policies and being unable to defend their peg against the (trading only at the time) euro currency.    They lost a fuckload in the process and when it became apparent that those that understand market arbitrage wouldn't let up (what killed Mexico/Argentia Peso as well), they backed out. Because the US Energy Information Administration at the time was run by the Bush Administration, which loved fossil fuels but hated renewables, so they predicted that coal and oil demand would soar while renewables would stall.  They also predicted that overall energy demand would rise (so we must dig more coal!) yet it actually fell due to efficiency improvements.  One suspects they knew all their forecasts were complete crap. Well, considering the US barely buys any Saudi oil...anywhere in the US is usually a good assumption.  Of course that completely ignores the global nature of oil prices and why you don't actually have to buy from them for them to benefit from the demand in the US. "This is the best tl;dr I could make, [original](http://uk.reuters.com/article/uk-britain-economy-idUKKBN1AJ0ZV) reduced by 77%. (I'm a bot) ***** &gt; &amp;quot;Firms&amp;#039; prospects for the coming year have slipped to a level which has previously been indicative of the economy stalling or even contracting ... largely reflecting heightened uncertainty about the economic outlook and Brexit process,&amp;quot; said Chris Williamson, IHS Markit&amp;#039;s chief business economist.  &gt; A rise in inflation to a near four-year high - largely driven by the fall in the pound since last year&amp;#039;s referendum - has prompted a minority of BoE policymakers to call for a reversal of last year&amp;#039;s cut in interest rates.  &gt; Prime Minister Theresa May unexpectedly failed to win an outright majority in a parliamentary election in June, and with less than two years before Britain leaves the European Union, her party has yet to agree a clear set of negotiating goals.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6rc2bx/britain_experiencing_sluggish_economic_growth/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~182238 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **year**^#1 **economy**^#2 **since**^#3 **Britain**^#4 **June**^#5" "US is the major oil consumer, and produces only about half as much - so the lower the prices, the better for it.   As for the oil industry in the US - it will never fail since government just prints more money to prop it up regardless of its real economic effectiveness: it needs it to defang OPEC from being able to pull off another 1974 Oil Embargo. Hell, Gore even invented the ""global warming"" just for that purpose!" There are two impacts: First, if the pound is dropping, then buying houses becomes cheaper for foreign investors, so they will tend to buy more houses as investments, which will drive house prices up. Second, in theory you might be able to get a mortgage in a foreign country, let's say in Euro, and you might hope that over the next few years the pound would go up again, and the Euros that you owe the foreign bank become worth less. "In layman's terms, oil on the commodities market has a ""spot price"" and a ""future price"". The spot price is what the last guy paid to buy a barrel of oil right now (and thus a pretty good indicator of what you'll have to pay). The futures price is what the last guy paid for a ""futures contract"", where they agreed to buy a barrel of oil for $X at some point in the future. Futures contracts are a form of hedging; a futures contract is usually sold at a price somewhere between the current spot price and the true expected future spot price; the buyer saves money versus paying the spot price, while the seller still makes a profit. But, the buyer of a futures contract is basically betting that the spot price as of delivery will be higher, while the seller is betting it will be lower. Futures contracts are available for a wide variety of acceptable future dates, and form a curve when plotted on a graph that will trend in one direction or the other. Now, as Chad said, oil companies basically get their cut no matter what. Oil stocks are generally a good long-term bet. As far as the best short-term time to buy in to an oil stock, look for very short windows when the spot and near-future price of gasoline is trending downward but oil is still on the uptick. During those times, the oil companies are paying their existing (high) contracts for oil, but when the spot price is low it affects futures prices, which will affect the oil companies' margins. Day traders will see that, squawk ""the sky is falling"" and sell off, driving the price down temporarily. That's when you buy in. Pretty much the only other time an oil stock is a guaranteed win is when the entire market takes a swan dive and then bottoms out. Oil has such a built-in demand, for the foreseeable future, that regardless of how bad it gets you WILL make money on an oil stock. So, when the entire market's in a panic and everyone's heading for gold, T-debt etc, buy the major oil stocks across the spectrum. Even if one stock tanks, chances are really good that another company will see that and offer a buyout, jacking the bought company's stock (which you then sell and reinvest the cash into the buying company, which will have taken a hit on the news due to the huge drop in working capital). Of course, the one thing to watch for in the headlines is any news that renewables have become much more attractive than oil. You wait; in the next few decades some enterprising individual will invent a super-efficient solar cell that provides all the power a real, practical car will ever need, and that is simultaneously integrated into wind farms making oil/gas plants passe. When that happens oil will be a thing of the past." Royalty trusts track oil prices (they're a pure play on ownership of a portfolio of mineral rights and do not otherwise have the operations that the oil companies themselves have).  Many publicly traded ones listed at the embedded wikipedia link.   Oil tankers are having a bang up business right now as described in the article, but that's because of the low prices and flood of product from the middle east.  The article notes that inventories are near capacity, so terminals and pipelines may be in for a few good years, though these do not directly track oil price.  However, as a way to bet on oil or oil services, many terminals and pipelines are organized as publicly traded master limited partnerships or MLPs, often spun out of a major oil company for tax reasons, allowing fine-grained investment in specific assets. The prices dropped because the scandal could mean: This some people estimated that the company could lose money, or have smaller profit. Thus each share was worth less money going forward. The mechanism is that in order to sell their shares the current share owners had to settle for lower prices.