Oil: the IEA predicts the end of the oil era for Russia

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The IEA predicts the end of the oil era for Russia. Rosstat has provided new data on inflation. Investors locked in profits ahead of the long weekend.
The international energy Agency (IEA) predicts that Russian oil companies will come to the peak oil production by 2021. Then gradually the volume of production will decrease. The Agency’s experts argue that the scope for increasing production in Russia is very limited. The Russian Ministry of natural resources confirms that almost all stocks already included in the production. Only 6% of mineral resources are in the undistributed Fund. At the same time, opening new fields now being extremely active.
A large part of the oil, which is not yet extracted, is the so-called tight oil, the cost of which starts from 70 and up to 150 dollars per barrel. In conditions, when Russia is under sanctions and limited the possibility of using Western technology to extract tight oil, really becomes a big question that will continue to live in the Russian Federation after completion of the oil era. Now the Federal budget depends on oil for 40% and if the estimate also indirect dependence of the Federal budget, it may reach 80%.
Meanwhile, Rosstat has provided new data on inflation. In February, inflation decreased to 0.2% from 0.3% in January. Thus, over the past 2 months the accumulated result, we have a price increase of 0.5%, annual inflation according to Rosstat now is 2.2%. There is a very high probability that by the end of 2018 we will have official statistics on the increase in oil prices to below 4%.
On this background the dollar exchange rate on the Moscow stock exchange is around 56 rubles 90 kopecks, the Euro traded at the level of 70 rubles 65 kopecks. The MICEX index reduced to 2285 points, quotes of Brent crude oil are slightly above $ 65 per barrel. Bitcoins according to CoinMarketCap has reverted to 6500 dollars.
Today is the last day before a rather long spring weekend, in connection with the celebration of 8 March. During the holidays, the Russian stock exchanges will be closed. Accordingly, wait for some big activity of buyers of Russian assets is probably not worth it. Likely many market participants prefer to take profits on positions accumulated, especially in contrast to Russia the Western courts tomorrow and the day after tomorrow will work, and in addition will publish a fairly large number of important statistics in particular labor market in the United States of America on Friday. Tomorrow a decision will be made at the interest rate of the European Central Bank. Therefore, we expect that today the dollar will gradually strengthen on the back of profit taking by market participants. The Russian Stock market will be under some pressure.
Gleb Zadoya,
The head of the analytical Department of the company,