How World Markets Effect Us
The World Markets is the main stock exchange in the oil and gas sector in the world, covering almost all of the oil producing countries. It is responsible for pricing the oil of about one hundred and twenty countries, that’s about three hundred and fifty countries altogether. The prices are set by the United States, Japan, Europe, the Organization of Petroleum Exporting Countries (OPEC), Australia and China. It is also supposed to harmonize the different rates between these so as to keep the price level constant across the board.
Before I begin I want to take a look at the numbers for the prices across the board. For the first half of the year (from the second half of the year when the prices really started dropping) the price was fairly consistent across the board, except for the prices in the Middle East. At that time the prices were on an incline, but they reversed towards the end of the year. So let’s look at some of the different world markets and how they affect us. For a start we have the New York Stock Exchange which is the largest of the world markets. For the price of one US dollar there are now several different stocks available in the NYSE, and for each stock there is a different underlying oil benchmark price.
There are also some international stock exchanges that effect prices here too, and the most widely available is the London stock exchange. For each stock there is a separate underlying market price, and the effect of this can be quite significant. One of the biggest underlying markets is the wheat market, and because of the high wheat production in the United Kingdom the price of wheat is highly sensitive to any changes in world markets. As such, traders who trade in the United Kingdom are able to benefit from having access to the World Markets when they need to.