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Analyst: the problem of the impact of Brexit on the oil market are greatly exaggerated

Аналитик: проблема влияния Brexit на нефтяной рынок сильно преувеличена

The primary drivers of world oil demand this year is China and other Asian countries, but not Britain, in this connection the problem of the impact of Brexit on the demand and the price of “black gold” seems highly exaggerated. This opinion was expressed Deputy Director of the analytical Department of “Alpari” Natalia Milchakova.

She reminds us that “since the historic vote, UK citizens for the country’s withdrawal from the EU (Brexit) from the European oil Brent has fallen in price on 4%, and Texas WTI crude oil lost 4.2% of the cost. “Prices of both reference varieties of raw materials fell below the psychologically significant $50 per barrel. However, yesterday the mood on world markets began to change to a more calm, but today the price of oil went up,” says the review expert.

According to her, “the forecasts of leading investment banks of the world remain quite optimistic about long-term consequences of Brexit for the global oil demand and consequently in prices. “So, analysts at the investment Bank Goldman Sachs in its review, said that if the GDP of great Britain after leaving the EU this year will fall by 2%, according to previously published forecasts the Bank of England, it would mean that oil consumption in the UK outside the EU could be reduced by 1% or by 16 thousand barrels per day. This corresponds to a reduction in global demand for oil only 0,016%. Thus, the exit of Britain from the European Union will not have a significant impact on world oil demand, and consequently on the price of oil,” says Milchakova.

Meanwhile, she said, “the primary drivers of world oil demand this year is China and other Asian countries, but not Britain, in this connection the problem of the impact of Brexit on the demand and prices seems to us greatly exaggerated”. “A British exit from the EU could slow down the incipient growth of the economy more in the EU than in the UK, and even then only at the expense of economically weaker countries in the Union. Germany today shows the economic recovery at the same rate as the UK, and the growth of the economy of this country contributes the maximum share in the oil and gas consumption in the European Union. Risks for the EU economy can create a strengthening of the dollar against foreign currencies. However, the strengthening of the American currency though, and it might have short-term impact on reducing oil prices, but rather a purely psychological as the most reliable financial asset” — the analyst believes.

In her view, “in the near future the issue of increasing US interest rates may be delayed, at least because the decline of the Euro and the British pound against the dollar improves the competitive ability of European goods and reduce the competitiveness of American counterparts”. “Thus, a significant strengthening of the dollar in the near future — an unlikely scenario. So, oil will soon return to the uptrend. Our forecast for the near future, the price of Brent is $48,5-50,5 per barrel”, — the expert adds

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