The price of oil: the Main issue is the depth of the current drop

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The main topic of the global currency markets today is the British pound. With “all due respect” to the volatile ruble, bends which provide a fertile ground for lovers of the epistolary genre, there are periods when the domestic currency’s absolutely nothing to report, and now is one of those episodes. The ruble continues to trade almost flat, bounded by 66,20 support line and resistance line is overwhelming 65.45 rubles per dollar.
U.S. traders to work the Day after Thanksgiving is hardly going to shake this stronghold, since further devaluation is limited to a good position of the budget and reserves of the Ministry of Finance – on the one hand, but to strengthen it is hardly possible in the conditions of falling oil. In tandem with the Euro, the ruble in the last week traded in a wider range of 77-74,50.
British Prime Minister Theresa may has spent yesterday the next day in the “battle on two fronts” in order to preserve its badly faded and worn by time strategy Brexit, and her own supporters, according to The Guardian, “lining up” to Express their intolerance of the situation. European leaders, in turn warned that there can be no question of further concessions to the UK.
In particular, speaking on behalf of the European Union, Germany said it was time “to put a cap on this (garbage) tank” to finalize a deal at the summit on Bracito on Sunday. The Spanish Prime Minister threatened “to veto Brakit”, while his representative in the EU has accused Britain of “perfidy” in the discussion of the status of Gibraltar. As a result, the British pound for the past day has fallen against the dollar by 0.7% to 1,2850, although today, for reasons not fully understood the decline has stopped – apparently, for a while.
Meanwhile, we have our own main topic on the agenda, namely the depth of the fall in oil prices. Now it is difficult to argue from the point of view of fundamental factors such as supply and demand, as the unclear status of North American Kantemirov – how they survive with oil at $55, which is below the threshold of profitability of most of them. Compared to the 2014 year their situation has deteriorated significantly, as they are now leveraged to the eyeballs.
Speaking about oil, at all – including from the Central Bank and even the head of the accounts Chamber Alexey Kudrin, their forecasts. Yesterday, Kudrin noted on the market their view that the current decline is likely temporary: “I believe this drop is temporary, it might be several months longer.
Now close to the current price level will continue,” he said. Given the lack of clear and understandable reasons for what is happening these days on the oil exchanges of the world – especially in the context of administration of the White house sanctions against Iran (even with the well-known comic “exceptions and exemptions”) – most likely, Kudrin this time right.
Vladimir Rojankovski,
“International Financial Center”