Black gold didn't stand a chance
Having played at the beginning of the short week's dividend cut-off in Sberbank, NLMK, the MICEX index tried to stabilize on Tuesday in the 1860-1870 range of items, but on Wednesday dived below due to the strengthening of the dollar against the ruble above 57 rubles per dollar.
In turn, the price of oil Brent on Tuesday, on the evening session, responded to lower on disappointing data from the American petroleum Institute (API). According to his information, published on Tuesday evening, last week increased crude oil inventories in the United States by 2.75 million barrels, which reduced the price of black gold by 1.2 % to us $ 48.2 per barrel of Brent. Investors had expected in the Asian session, the situation will begin to improve, as the survey of experts on the oil market conducted by Bloomberg, contrary to the data API. Experts expect that the data of U.S. Department of energy, published on Wednesday, shows inventory decline by 2.45 million barrels. However, the price was not adjusted upwards, and was trading in the range of $ 48-48,5 per barrel, in response to the negative report from the International energy Agency and awaiting official data from the US Department of energy. The data was good, overall crude oil stockpiles and the stockpiles of Cushing decreased by 1.66 million and 1.15 million barrels, respectively. But oil production in the USA remained at a high level, 9.3 million barrels per day. After the release of such statistics, the price of Brent crude oil has fallen by 3.6 %, to $ 47 per barrel, where the last time was at the end of November 2016.
On the value of Russian equities in addition to oil impact the threat of new sanctions against certain sectors of Russia's economy. This topic will get more response in the quotes after the US President will sign the bill. However, think about the consequences is now. For example, it is known that there may be a ban on investment in sovereign bonds, a ban on lending to Russian companies, participation in privatization etc., which may cause a revision of the credit ratings of the issuers of the key sectors of the Russian economy.Again, the ruble is tied to oil
The U.S. dollar yesterday, fluctuating near the mark of 57 rubles, and only after the failure of oil prices slightly rose to 57.2 ruble. Russian officials in recent years, often talking about the fact that the ruble was not bound to the price of oil. But this is only partly true. We observed increase of the ratio of the 90 - day correlation between ruble and oil in the period of 1 year up to 0.55 points in mid-June from 0.33 at the beginning of may. Correlation start increasing in may as investors waited for key events - the OPEC meeting. Now, when it became clear that the production volume will be reduced by 1.8 million barrels per day for another 9 months, investors were disappointed as was expecting big numbers for the volume reduction. Against this background, the oil price fell down by 11.3 %, to $ 48 per barrel of Brent, despite the fact that the ruble has weakened just 1.4 percent, to 57 rubles to the dollar, as investors reduced the risk premium for Russia. We believe that the weakening of the ruble will continue in June and July due to the slowdown in the growth rate of the balance of the current account that will be impacted by seasonal factors - reduction of energy demand due to warm weather, dividend payments, which immediately converts the currency for payment to holders of Depositary receipts, as well as the tourist season for Russians. Although the population continues to maintain a savings behaviors that should not lead to significant spending on vacation. But the main factor for the Russian ruble will be the meeting of the Bank of Russia key rate on June 16. Last week, the head of the Central Bank Elvira Nabiullina during a speech in the state Duma said about the possibility of a rate cut by 25 - 50 basis points to 9-8,75 % per annum .Theoretically, this should weaken the ruble and reduce the yield of OFZ. In our opinion, the dollar will get stronger against the ruble to 60.2 rubles, and at the very least. However, many traders think that the rate reduction is already incorporated in the market. On the other hand, a weak ruble will help to strengthen the position of Russian exporters on external markets. Plus money market rates will decline, which will make more affordable funding for banks and financial companies, and on this background the Russian stock market may grow.
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