Shock over the unexpected Brexit outcome of UK's referendum shook through the markets on Friday as sterling plummeted to a 31- year low, falling more than 8% against the dollar and 6% against the euro.
As expected, in the face of a Brexit result, oil futures also suffered. Brent North Sea crude tumbled around 6 percent at one point today to $47.54 a barrel and US benchmark West Texas Intermediate traded down 7 percent for a time to $46.70 a barrel.
Despite Friday's drops, oil prices have held above last week's one-month lows when fears of a British exit from the EU reached a crescendo and Brent sunk to $46.94 while US crude fell to $45.83.
Baker Hughes US weekly rig counts came out Friday, reporting the number of active oil rigs declined by 7 to 330 while the number of gas-only rigs rose by 4 to 90 for the week ending June 24th, bringing the total number of oil and gas rigs to 421 from 424. This was the first overall drop reported by Baker Hughes in a month. The report of a drop in supply caused a slight ripple upward in oil prices but the greatest effect of the day definitely went to UK referendum results.
In the end, Brent crude dropped by 4.9% ($2.50) to $48.41 a barrel and West Texas Intermediate futures for August settled down by 4.5% ($2.47) to $47.64 a barrel, its biggest one day decline since February. However, losses on the week were much smaller, with Brent down 1.5% and WTI down only 0.7%.
Friday's main influences, the bears and bulls:
The Bears:
- The unexpected UK referendum result in favour of leaving the EU
The Bulls:
- The first drop in active oil and gas wells reported in a month by the Baker Hughes US rig counts
