Brexit Complications Deepen As Britain Enjoys Weaker Pound

Two Brexit related stories last week, showed how Britain is currently having its cake and eating it. The first had to do with the High Court decision to subject Brexit to a parliamentary vote. The court ruled that article 50 – the EU article that must be activated by any country wishing to leave the union – cannot be invoked without parliamentary support. The second story had to do with the sharp increase in tourism to London that Euro Star reported. According to reports on Bloomberg, Euro Star saw an 18% increase in the amount of passengers travelling from Paris to London.
read more…

Venezuelan Bolivar Faces Bottomless Decline

One of the most volatile currencies on earth is facing more devaluation. The Venezuelan Bolivar, which had a measure of stability for most of the year, is now quickly depreciating. Black market prices for a single US Dollar are expected to reach the $1,700 Bolivar mark before the end of the year. This is partly due to the abysmal performance of the Venezuelan economy, which contracted by about 10% this year, and other factors that are not as publicized. Certainly the decline in oil prices, oil infrastructure investment and the lack of production in other sectors, have taken a toll on the Venezuelan economy. Nevertheless, political unrest and inflation are pushing the US Dollar to new heights, prompting people to pay whatever it takes to acquire an asset that will keep its value.
read more…

Oil Plummets Once Again

Apparently when OPEC finally agrees on a cut in production, its members cannot agree on the production baseline from which cuts must be calculated. Additionally, meetings between OPEC members and non-OPEC oil producers, have not yielded an agreement either. As a result, oil production prospects remain intact. The price of oil plummeted on Monday, with WTI dipping below the $47 USD mark for the first time since the end of September.

The 4% drop in WTI prices on Monday, affected the currencies of non-OPEC producers. The Colombian peso dropped to a 2 month low, finishing the day at $3,005 COP per USD. The Russian Ruble hit a 1 month low, closing at $63.4 RUB per USD. Both countries will probably be unable to balance their budgets, due to irreplaceable loss of government oil-related revenue. read more…

Oil Struggles To Hold Gains

Oil traders should hold those bulls. The fundamentals of oil markets have not yet changed, and the price of crude reflects that. Demand is pretty stagnant, and supply is abundant, which means prices have really struggled to hold their gains. WTI has been unable to stay above the $50 USD mark for long, and prices have just dipped below $50 for the first time since October 7^th – prices closed 6 cents below $50 on October 17^th, but that slight drop was not very significant.

In fact, the WTI price curve is now developing a downward trend. Price has been going down steadily since October 21^st, despite turmoil in Venezuela – and rumors of PDVSA’s default – and more recently an attack on a pipeline in Nigeria. Event like these would have probably sent WTI prices up just a few years ago, but the lack of enthusiasm about oil prices seems to stem from longer term concerns about demand, and to a lesser extent from OPEC’s historic inability to commit to production cuts. read more…