Oil at $ 65 this is a high risk to the ruble and the Russian Treasury

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All the brightest and most dynamic in recent weeks is happening in the oil market. On the eve of the bears here did a good job and took the same barrel of Brent below support at $65. In fact, our goal of reducing developed, the new minimum is at $64,61.
Sale increased on a neutral external background, which could indicate a peak reduction in the current medium-term downtrend. There are few signs that the barrel may suspend the fall, and optimists – to repurchase a portion of the sales. First, this is a huge oversold in raw materials, Brent current oversold levels last seen four years ago. Second, the speed of falling prices – per day barrel of Brent crude oil has lost almost 7% of the cost, which may point to the emotional nature of the sales (sell everything and I sell), and technical (where would massively trigger stop losses).
Thirdly, there are signs of contango – far futures contract traded at a premium to underlying asset, which may indicate market confidence in future high prices. This, of course, not a sign of fast and approaching a turn, but as one of the signals the completion of the current motion could be taken.
Inhibition of sales in Brent can happen about $64,50-65,00. Somewhere in here will be willing to purchase part of the sales at lower price levels. New support is present at $64,05, it market will be held in the event of a resumption of decline and a new wave of deterioration in market sentiment. In the $64,50-of 64.00 is the line of correction to the global upward trading channel. It can also be an area of inhibition sales. Strong support is much lower, near $60,00-60,50.
That’s another thing I want to note: the price of $65 per barrel of Brent is the approximate boundary where the surplus of the Russian budget due to the cosmically high oil prices, becomes a deficit, as the carriage into a pumpkin in the famous fairy tale. This is the risk for the Treasury and for the ruble, and for the OFZ market.
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Anna Bodrova,
Senior analyst,
Alpari