With the Brexit campaigning suspended after the murder of a lawmaker, crude oil prices and energy-related exchange traded funds bounced on hopes that the halt in campaigning may have sapped the momentum for a United Kingdom break away from the European Union.
On Friday, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, rose 3.2% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, gained 3.3% after both funds declined 9% over the past week.
Meanwhile, WTI crude oil futures were up 2.8% to $47.5 per barrel and Brent crude oil futures were 3.2% higher to $48.7 per barrel on Friday.
While a British exit from the European bloc or so-called Brexit may not have a direct effect on oil prices, the subsequent volatility could drag on riskier assets like commodities and add to concerns over a global slowdown in energy demand. Moreover, commodities may find pressure from a strengthening U.S. dollar as many expect the British pound to depreciate following a break.
“It’s mainly Brexit at the moment, at least until next Thursday, before people start to look at the more fundamental oil/commodity drivers again,” ABN Amro’s senior energy economist Hans van Cleef told Reuters.[related_stories]