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Tuesday, December 6, 2016

The United States and Canada to help grow the oil and the ruble


Numerous negative for oil the signals were ignored by the world market. On the contrary – it only responds to positive signs. As a result, the price of black gold is growing again, and then the ruble strengthened. What moves oil prices up and helps Russian currency well to survive the traditionally difficult for the ruble the month of may?

Oil after small losses on Thursday pared some losses on Thursday and continued growth. As at 14.45 GMT, Brent crude gained nearly 3% to 45.95 $ per barrel, WTI is over 3% up to 45.41 USD.

“The second half of the year is usually much more difficult for the ruble than the first”

Support the black gold was given the data of U.S. Department of energy on the reduction last week of production at 113 thousand barrels per day – to 8.83 million barrels. This is the lowest level since September 2014. “This weekly decline was the sharpest since August 2015. Since mid-January, production decreased by 410 thousand barrels per day”, noted strategists at Sberbank Investment Research.

The most interesting that investors, in fact, ignored negative information about growth of oil reserves in the United States 2.8 million barrels – up to 543,4 million This is a record from 1929 figure.

At the same time, rising oil and contribute to forest fires due to dry weather that began in the canadian province of Alberta a few days ago. The city of Fort McMurray, which is home to more than 80 thousand people, began the evacuation of its entire population, there burned about 1600 buildings. According to Bloomberg, the fires have already led to a decrease in oil production capacity in the country by 800 thousand barrels a day, and power may be reduced to 1 million barrels per day. At this point the corporate statements of Suncor Energy and Royal Dutch Shell and the data published in the quarterly report on oil Sands of Alberta, noted in Sberbank IR. It supports the growth of prices on the American mark WTI.

Finally, another factor that supported oil quotations, – the intensification of the conflict in Libya. Oil production in the country, which has been reduced, may continue to decline, as the confrontation between the warring East and West political factions interfere with the transportation of cargo of the Swiss commodity trader Glencore, according to Reuters.

Oil production in Libya may be reduced by 120 thousand bpd if the national oil company of Libya (NOC), based in Benghazi, will continue to block the loading of tankers for Tripoli through the Eastern port of Marsa El-Hariga (Marsa el-Hariga), warned of the relevant official, quoted by the Agency.

I must say that market participants are ignoring negative news for oil. It is not only information on growth stocks, which means production decline is still not enough to balance supply and demand.

In addition, negative news also come from OPEC, which explicitly say that the meeting in June will not even discuss the decline in production. “The cartel clearly pleased with the dynamics of prices and does not want to consider self-restraint as measures to stabilize the market. This is a dangerous situation because the oil is quite expensive, and private producers may defer their plans to reduce production,” – says financial analyst FxPro Alexander Kuptsikevich.

Another factor of potential danger is the dynamics of the dollar, which recovered the third day in a row after a serious decline. The strengthening of the dollar could seriously put pressure on oil, which price is expressed in us currency. “While this factor is also lowered markets. Nevertheless, the potential for the growth of the dollar is significant, and if it will be implemented, then further rally black gold will be called into question,” – says Kuptsikevich.

Meanwhile, investors are ignoring the negative for oil, it allows to strengthen the ruble and also. He returned to 65,78 ruble per dollar and 75,19 rubles per Euro calculations “tomorrow”.

The Russian ruble also can expect hard times. “The second half of the year is usually much more difficult for the ruble than the first, but the period may – June is becoming a point of balance before the scales will swing in the direction of the U.S. and the EU”, – says Anna Bodrova of Alpari.

August is usually not the most prosperous month for the Russian ruble. Impact may holidays and the cutoff of Russian companies under dividends prior to the beginning of may holidays, she explains.

In addition, in anticipation of the holiday season increases the demand for currency, which also puts pressure on the ruble. However, this year, given the decline in tourist flow abroad in Turkey and Egypt, and refocusing on domestic areas – Krasnodar Krai and the Crimea, this factor of pressure on the ruble must be less strong.

On the other hand, this year the ruble will push the monthly payments of Russia on external debts, which began in April, said Bodrov. Peak quarterly payments will be in June, and the main stress is on the fourth quarter of this year. “Against this background, the demand for foreign currency will rise, this point may weaken the position of the Russian ruble”, – experts say.

In addition, it indicates Bodrov, inflation is “stuck” in the area of 7.3–7.6 percent for several months. This will keep the Central Bank from the revision in the key rate downward and becomes a negative factor for the ruble. Forecast expert Alpari ruble: in may the dollar will be worth in the region of 63.5–69 rubles, euros – within the boundaries of the ruble 72-81.

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