Oil under trade wars, and the ruble is under sanctions

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Extremely important news about employment in the USA in the Russian market on Friday, overshadowed by reports about the introduction of personal sanctions against Russian businessmen and a number of companies. In late trading, the Russian currency went into even sharper decline after oil.
The opening of the American market has returned to the markets fears that a trade war hurt energy demand. As a result, American WTI lost 1.7 dollar, or 2.7%, falls below $62. Quotes Brent fell slightly less – 2.4%.

THE RUBLE IS UNDER SANCTIONS

As a result, the ruble at the end of trading on Friday lost 47 cents to the dollar and 76 cents to the Euro. Quotes USDRUB rose to 58.175 and EURRUB to 71.38 – in the region of the February highs. It should be noted that the weakening of the ruble has occurred mostly after the oil, not the news about the sanctions. Probably, as in the case of 2014, the sanctions are not the cause of the weakening of the ruble. However, they “bind” the ruble to the dynamics of oil, making its vibrations more extensive and unpredictable.
Take some time to assess the markets the negative impact of the new sanctions. This assessment is rapidly moving in shares of “RUSAL” – on the stock exchange of Hong Kong shares has fallen by 40%, and the company warned of the possibility of technical default. Other “sanctions” the company is continuing to assess the damage.
The main damage from the sanctions is that the economy in the face of new sanctions ceases to be a buffer of the ruble, so it will be more responsive to the dynamics of oil which is quite volatile.

THE GROWTH OF OIL PRODUCTION IN THE UNITED STATES

In addition to fears around the shopping wars for oil under pressure of the news about production and consumption. Posted on Friday weekly data on the number of drilling rigs operating in the United States for the first time in three years showed a value above 1000.
It promises an even greater expansion of production in the next 6-9 months despite the fact that now she’s breaking records. Since the beginning of the year, the US increased production by 1 million barrels per day to 10.46 million, Adding that pace in the first half of the year they can overtake the Russian figures close to 11 million
All this promises to result in another wave of overstocking the markets with oil in 2014 and cause collapse of prices, if the other players will not reduce their offer.
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Alexander Kuptsikevich,
Financial analyst,
FxPro