Translated by Ollie Richardson for Fort Russ
17th February, 2016
The “freezing” of oil production by Russia and OPEC countries will contribute to the establishment this year of the prices for oil being above 31,64 dollars per barrel (It is possible to exclude the scenario of falling prices to 10 dollars a barrel and the dollar increase to 100 roubles, as is extremely unlikely). In addition, when the price of a barrel goes below $50 the production of shale oil in the U.S. will continue to decline, which is part of Russia and OPEC’s plan.
As a reminder, on February 16th, Russia and several OPEC countries (Saudi Arabia, Qatar, and Venezuela) agreed to freeze oil production at the level of 11th January. On this day, the price of Brent crude oil closed at 31,64 per barrel, the dollar – 76,24 rubles, Euro – 81,91 rubles.
If the latter agreed to cut oil production by 5 percent (i.e. 2,125,000 barrels per day), it would eliminate the imbalance between supply and demand on the oil market, which in January, according to estimates by the IEA, amounted to 1.75 million barrels per day. Oil prices in this case would have quickly returned to the range of 45-50 dollars. Now we can predict their growth prior to the designated range in the second half of 2016.
Of course, the ruble this week will affect not only the oil factor, but also the sale of foreign currency earnings by exporters, the improving macroeconomic statistics in Russia and the increasing likelihood of expansion in March of incentives of the Eurozone.
Today you should pay attention to the publication of the minutes of the January Federal Reserve meeting. In the baseline scenario in February, the dollar will fall in the range of 70-75 rubles.