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