How the Price of Crude Oil Affects the Stock
What are the effects of low oil prices on different
22. JANUARY 2016 - At the moment of writing this article, the price for a barrel of crude oil has reached its lowest point in 13 years at only $27 for
a barrel. Traditionally, the price of crude oil has been one of the main factors governing global economy, also
affecting the stock market in more ways than most people can imagine. Today, we will try and give something of
an analysis of what these historically low crude prices mean for the stock market and the traders.
Oil Companies Stocks are Losing Value
Perhaps the most obvious and expected effects of the low crude oil prices is that the majority of world's oil companies are seeing their stocks
depreciate rapidly. This is perfectly understandable as their profits are dropping and as they are laying off
more and more people.
|As the price of crude oil falls to near record levels, this has affected not only
the value of oil companies,
but also other related industries, investments and the whole economy.
Automotive Industry Stocks are Rising
On the other hand, you have different automotive companies whose stocks are getting more and more valuable as
people are purchasing cars stimulated by the dropping gas prices. This is also true for most other transportation
companies, such as airlines which can afford to offer discounts and thus attract more fliers, resulting in
increased profits overall. Smaller companies associated with the transportation industry are perhaps seeing the
biggest rise in stock value as they are most directly affected by the dropping oil prices.
Entire Stock Exchanges are Shaken to the
There are quite a few stock exchanges that are more dependent on the prices of crude oil. One of the most
obvious examples of this is the Moscow Exchange which has traditionally been affected by the price of fossil fuels
and other basic commodities. For instance, the Russian ruble's value has dropped to record lows. Middle Eastern exchanges are also rocked by the low oil prices.
Real Estate Markets are Greatly Affected
In addition to the more directly affected industries, some additional industries also suffer due to the drop in
oil prices. For instance, the real estate markets in a number of
U.S. states such as Alaska, North Dakota and Wyoming are facing a crisis as people are losing jobs and the demand
for residential and commercial properties is on the decline. Because of this, various construction and associated
companies are experiencing significant drops in stock value.
Forex and Binary Option Markets are also
Traditional stock market is not the only one affected greatly by the low oil prices. For example, the
forex market is more volatile than ever
before with certain oil-dependent currencies rapidly losing in value. These include the aforementioned rubles,
Canadian dollar and Venezuelan bolivar, among others. According to the experts from 24Option, the binary option market is also experiencing increased action as the prices of
commodities become more volatile than in a long time.
How Should Traders Behave?
The most important thing for stock market traders to do is to keep their eye on the prices of crude oil and to
read analyses by different experts who know exactly how these low prices affect the different industries and
stocks. This may be a great time to make some big moves, but it is also very important for traders to be careful as
these are very eventful times that can move in all directions.