Brexit is a term used to explain Britain’s exit from the European Union

Question
Read the following article, answer these questions:

• What is a ‘Brexit’ from economic perspective? [100 words]

• Using your quantitative skills, provide a brief summary of Britain’s major trading partners. [200 words]

• How might businesses change their answer to the three fundamental questions (what to produce, how to produce, for whom to produce) [100 words]

• Briefly describe the supply side elasticity of the good/service focused on in the article, remember to justify your answer (note if your article discusses more than one good or service please select one). [100 words]

• Briefly describe the demand side elasticity of the good/service focused on in the article, remember to justify your answer (note if your article discusses more than one good or service please select one). [150 words]

US crude oil price falls on Brexit worries, supply glut

Oil prices tumbled 5 per cent on Tuesday, with US crude heading for its steepest daily decline in five months, as investors worried that Britain’s exit from the European Union would slow the global economy, making it unlikely energy demand will grow enough to cut a supply glut.

Data showed higher supplies, including an inventory build at the delivery hub for US crude futures.

Brent crude was down $2.44, or nearly 4.9 percent, at $47.66 a barrel.

US crude fell $2.55, or 5.2 percent, to $46.44. That was the biggest one-day percentage drop for US crude since February 9, Reuters data showed.

Brexit worries hit Britain’s property market and drove the pound to a 31-year low. A

flurry of data from China in coming weeks is likely to show weaker trade and investments.

Traders also cited data from market intelligence firm Genscape showing a build of 230,025 barrels at the Cushing, Oklahoma, storage hub for US crude futures, during the week to July 1.

“There are risk-off trades across the board,” said David Thompson, executive vice-

president at Washington-based commodities broker Powerhouse. “Stocks, commodities, sterling are all off while US bonds and T-bills are soaring.”

Oil prices are up almost 80 per cent from 03-year lows of around $27 for Brent and $26 for US crude. The rebound was fuelled by supply outages from Canada to Nigeria that created the perception that a two-year-old supply glut may be easing.

Yet, a partial recovery in Nigerian output helped boost OPEC crude production last month, a Reuters survey found.

“The increase in OPEC production threatens to postpone the anticipated rebalancing of the global market,” said Tim Evans, energy futures specialist at Citi Futures in New York.

In Libya, where oil output has slowed to a trickle due to conflict, the National Oil Corp agreed to merge with its domestic rival, raising hopes the OPEC member could start to pump more.

A Reuters review of disclosures by the largest 30 US shale firms showed 17 increased their hedge books in the first quarter, the most at least since early 2017.

Several, including EOG Resources Inc and Devon Energy Corp, two of the biggest shale companies, secured significant protection of future earnings for the first time in at least six months.

Table 6: Change in UK monthly trade with significant partner countries1, May 2016 compared with April 2016

Exports (£ million)

Imports (£ million)

May 2016 value

1 month change

May 2016 value

1 month change

1

USA

3,800

-670

1

Germany

5,142

+198

2

Germany

2,609

-1

2

China

3,272

+49

3

France

1,615

-124

3

USA

2,619

-280

4

Irish Republic

1,484

+115

4

Netherlands

2,532

-144

5

Netherlands

1,232

-308

5

France

1,988

+112

6

China

1,216

-159

6

Belgium and Luxembourg

1,797

-157

7

Belgium and Luxembourg

984

-18

7

Spain

1,397

+163

8

Spain

834

+60

8

Italy

1,388

+33

9

Italy

763

-5

9

Irish Republic

1,010

-24

10

Switzerland

397

-772

10

Norway

708

-242

Source: Office for National Statistics

Notes

1. Significant trading partners defined as top 10 export markets and import sources 2017 (see attached table 14).

2. USA includes Puerto Rico.

“You have to remember that sentiment in this market is still so fragile,” said Michael Tran, director of commodity strategy at RBC Capital Markets in New York. “Producers

ended up locking in something in case we did a double dip.”

Storage of refined oil has hit a glut at New York harbor.

Originally posted 2017-01-09 20:47:33. Republished by Blog Post Promoter