The benchmark oil prices West Texas Intermediate (WTI) futures drop and eventually break out the support level of $70 per barrel allegedly because of gradual weaker demand.
The reduction in the oil prices is advantageous to industries that depend much on fuel prices including; the cruise, airline and logistics shipping industries as lower gas prices will cut operating expenses and therefore leave more to the earnings.
If the drop persists we shall see more airlines and cruise shares on the top movers list in the coming days including the cruise trio Carnival (CCL, Financial), Royal Caribbean (RCL, Financial) and Norwegian (NCLH, Financial) and top airlines like Delta (DAL, Financial), United Airlines (UAL, Financial) and Jetblue (JBLU, Financial) and also to logistics business like Maersk.
However, this decline has been attributed to a two edged sword. When oil prices down many other commodities follow:
Source: processed independently
Other products such as coal, natural gas and palm oil that tend to follow the trend in the same movement of crude oil. Above is a comparison of commodities' benchmark prices of oil (candlestick ), coal (purple line), palm oil (red line) and natural gas (blue line).
The red box indicates a plunge in the oil price that followed with an even more pronounced dip in coal, natural gas and palm oil. While the blue box shows a surge in oil price followed by more festive uptick in other said commodities prices. For uranium the story this time can be different.
Normally we can also see uranium plunge when oil prices go down, just take a look at your nuclear shares, take Cameco (CCJ, Financial) for example. When the pandemic hit and during the oil bear market in 2014-2016 the CCJ shares also depressed as consumers tend to use cheaper energy than nuclear power. But the story can be different now as we are seeing more tech companies seeking clean energy and picking nuclear energy to power their artificial intelligence technology.
However the escalating geopolitical tension in the Middle East could give a sudden rise to oil prices. Given its volatility and uncertainties, maybe it is best now to wait and see.
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