14.11.2019: Oil approaching $63 level (Brent, USD/RUB)

Oil continues to grow after the data from the American Petroleum Institute showed a surprise drop in US crude inventories. Comments from OPEC members about possible restoration of the market balance provided additional support for the quotes. The Russian currency is extending weakness since the US dollar is gaining ground. OPEC Secretary General Mohammad Barkindo announced that the US shale oil production could grow much less than expected next year, which is
likely to restore the balance in the market. OPEC members are also looking forward to successful outcome of the US-China trade negotiations. Decreased tensions in the trade war may help boost the demand for commodities. Meanwhile, the forecast from the Energy Information Administration offset the comments from OPEC with its upward revision of oil output in
the US. According to the EIA, US oil production will rise by 0.2% this year and by 0.9% next year. Report form the American Petroleum Institute provided significant support for the oil quotes. The industry data showed that crude stockpiles in the US dropped by 541,000 barrels in the week ended November 8. Oil prices are holding firmly high with Brent oil trading at 62 dollars 85 cents a barrel. Today, market participants are waiting for the official report from the US Department of Energy which will confirm or deny the decline in oil inventories. This data will determine future dynamic of the oil prices. So far, crude stockpiles are forecasted to increase by 1 million barrels. The Russian currency is trading mixed amid negative external background such as weak macroeconomic data from China. Besides, uncertainty around the trade deal continues to put more pressure on the currencies of the emerging markets, including the ruble. Persisting disagreement over the tariffs between the US and China stops them from further progress. The strengthening US dollar weighs on the ruble as well as on other currencies of the emerging markets which slipped yesterday to the negative zone.The Chilean peso has decreased the most, reacting to the ongoing protests in the country. The situation in Hong Kong also stops investors from taking risks. Although the ruble was able to slightly regain ground against the US dollar, it is still trading above the mark of 64. In the short term, the dollar/ruble pair is unlikely to go below this level. At least, there are no obvious reasons for such trajectory. Local factors have limited impact on the Russian currency, despite the successful placement of the federal loan bonds. Today, the ruble is mainly influenced by external factors. Currently, the increased uncertainty in trade talks serves as the main reason for the ruble’s weakness.

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