Russia is hopelessly behind in the technology of oil production
Russia is hopelessly behind in the technology of oil production. Investment bankers say about the loss of carry-trade. Crypto-currency bubble continues to deflate.
In Russia there are no technologies for hydraulic fracturing of oil reservoirs. There’s only one experienced industrial installation. About it the President reported to the Minister of energy Alexander Novak. The technology of hydraulic fracturing are widely used around the world and allow you to increase the efficiency of oil production. Technology allows almost twice to increase extraction efficiency.
The problem became very acute and urgent in Russia after the latest package of Western sanctions imposed restriction on foreign companies that helped the Russian oil companies to extract hard-to-recover oil. In the absence of technological breakthrough, the oil era for Russia may be quickly exhausted. So experts predict that production in Russia will rise until 2021 and then gradually the volume will begin to decline.
Meanwhile, many Western investment companies claim loss carry-trade, or that he will become unprofitable in the near future. This contributes to the increase of interest rates in the advanced economies, growth rates in the value of currencies of funding and ending programs of quantitative easing. All this, together with the gradual lowering of the key rate in Russia can make Russian assets unattractive to foreign investors. We have already repeatedly said that the outflow of Western capital in the first turn of the Russian market of public debt is like a time bomb.
The past few years, we have seen that is actively increasing presence of Western money into the Russian market, but when the strategy stops working, they will start to take their money back. This will lead to very significant increased volatility in the Russian market.
On this background the dollar on the Moscow stock exchange is at the level of 57 rubles and 25 kopecks, the Euro traded at the level of 70 rubles 55 kopecks. The MICEX index holds near 2275 points, quotes of Brent crude oil rose above $ 69 per barrel. Bitcoins according to the website CoinMarketCap is around $ 7,100.
Blowing of crypto-currency bubble continues. Bitcoin has fallen out of favor among investors after the people’s Bank of China on toughening of regulation of the cryptocurrency market in 2018. Now the whole market capitalization of crypto-currencies is a little more than $ 250 billion. The capitalisation of the three most heavy cryptocurrencies: Bitcoin, Ethereum and Ripple is only about $ 10 billion. The potential decline in rates of cryptocurrencies remains. It is likely that the same Bitcoin can drop in price to two or maybe even four times.
As for the Russian market, the week we are likely to finish in the range from 57 to 58 rubles per dollar, and in April will begin a gradual weakening of the ruble. We will first see the exit to the area of 59 rubles per dollar, but rather aim for growth by the summer can be a mark of 60 rubles per unit of us dollar.
The head of the analytical Department of the company,