And as the world comes to terms with the news that the U.K. has voted to leave the E.U., the oil market is getting a wop bop a loo bop a lop bam walloped. Hark, here are five more energy-specific things to consider today:
1) Energy commodities are getting crushed as a result of the Brexit vote…although one is doing well: U.K. natural gas (aka NBP). Given it is denominated in pounds, and that the pound has been clobbered to its lowest level since 1985 (think: The Goonies, The Breakfast Club, Wham! with ‘careless whisper’ and ‘wake me up before you go-go’), it has suddenly become much cheaper in foreign currency terms.
Given the U.K. is connected to the continent by a reversible pipeline, the incentive to suck suddenly-cheaper gas from the U.K. has blown open the arbitrage between the two European entities. Combine this with news that the largest U.K. natural gas storage facility, Rough, may not be topped up as usual this summer due to an outage, and unlike the rest of the energy world, NBP looks up.
2) The chart below of Saudi oil inventories highlights that inventories are being drawn down, despite Saudi oil production remaining strong at around