Thursday, May 26, 2016

Barrel for $ 50, what will happen to oil prices and the exchange rate of the ruble – RBC

Photo: Yegor Aleev / TASS

Price oil for the first time in 2016 exceeded $ 50 per barrel thanks to China and the disruption to oil supplies around the world. The growth of quotations for the benefit of the Russian economy, but experts are in no hurry with the optimistic forecasts

Why more expensive oil?

On Thursday, the price for Brent crude traded in London for the first time this year exceeded $ 50 per barrel. By 12:45 MSK its cost was $ 50.11, 0.48% more than the closing price the previous day

The main reason for rising oil prices -. Decline in production due to a variety of emergency situations, says analyst “Renaissance Capital” Ildar Davletshin: Nigerian production fell by more than 0.5 million barrels. a day, about the same as Canada loses. To this we must add the supply disruptions from Kuwait, Kurdistan, Venezuela and Libya, he lists.

This is also reported last week in his report the investment Goldman Sachs. Among the causes of the oil shortage of bank analysts called the increased demand for it in China, and supply disruptions due to the fires in Canada and attacks on pipelines in Nigeria in early May.

According to Goldman Sachs, the market situation oil finally close to balance supply and demand. In the first quarter of 2016 world production declined to 96.43 million barrels. per day compared to 97.23 million barrels. in the fourth quarter of 2015. In the second quarter production will drop even more – up to 95.63 million barrels. per day, analysts predict the bank. The demand was higher than expected. In January-March 2016 it decreased from 95.48 million to 95.07 million barrels., But in the second quarter will rise to 95.7 million barrels. and will continue to recover. Conclusion Goldman Sachs: in May, the market formed a shortage of oil, which can be maintained throughout the second quarter of 0.07 million barrels. per day.

What will happen to oil prices further?

By the end of 2016, oil prices could exceed $ 55 per barrel, said principal owner of Lukoil Vagit Alekperov on May 18 in an interview to television channel “Russia 24″. “Most likely, the price of oil today would have to fluctuate in the range of $ 45-55, and by the end of the year we may be witnessing the price and will exceed this figure,” – he said (quoted by TASS). The reason for this growth, according to Alekperov, may be underinvestment in the sector, which will lead to a decrease in production and the production.

«I think oil can rise about one month, maximum two, then production recovers in Canada and Nigeria – Davletshin said. – By this time, production in the US will cease to fall, and the driving season comes to an end. ” The expert expects that due to these factors, the price of oil may return to the values ​​in the neighborhood of $ 40 / bbl.

Senior UBS analyst Maxim Moshkov believes that oil prices will continue to rise due to the production cuts in the world. Another argument in favor of this – in the US decline of oil reserves by 4.2 million barrels. (Up to 537.1 million barrels.), Which was announced this week, he recalls. According to him, the average price in 2016 is $ 42.5 / bbl., But in the fourth quarter will be about $ 49.

What will happen to the ruble exchange rate ?

On the rise in oil prices the ruble has responded. On Thursday, May 26 at the opening of trading on the Moscow Stock Exchange the dollar fell below 65 rubles. The cost of the euro has fallen to its lowest level this year – 72.68 rubles

A further increase in oil prices will lead to a strengthening of the ruble, despite the seasonal factor: the ruble in the summer is usually weaker due to demand. currency during the tourist season and the reduction of foreign currency earnings of exporters, said the chief expert of the Center for economic forecasting Gazprombank Yegor Susin. He predicts that oil prices may strengthen to $ 55 / bbl. in the short term the dollar and thus it will cost 60-65 rubles. But by the end, the expert expects $ 40-50 / bbl. and 65 rubles. the dollar.

The question is, will the mark of $ 50 support level, from which prices can go up, writes in his review of Sberbank CIB analysts Tom Levinson and Iskander Lutsk. “To a large extent the growth of oil prices caused by short-term supply disruptions, and if the Fed will raise rates this summer, prices could also come under pressure,” – they added. Concerns about the upcoming Fed rate increase may slow down the growth of the ruble caused by the rise in price of oil, analysts say: “However, the price is above $ 50 / bbl. speaks about the possible movement of the pair dollar / ruble to around 64,50 »

Among the risks to oil prices -. possible recovery of previous levels shale mining companies, weak data on the Chinese economy, the Fed rate increase, as well as Central Bank rate reduction and significant payments on external corporate debt, the expert lists “BCS Express” Ivan Kopeikin. “The only positive factor – the ruble slightly oversold in relation to oil prices, as it slightly reacted to the previous rise in oil prices. And that means that when oil prices fall weakening of the ruble will be moderate, “- he says. In the short term the dollar, according to analysts, could cost about 68 rubles.

The potential for further strengthening of the ruble is limited, agrees analyst “Uralsib” Irina Lebedeva. Excluding the impact of oil on the ruble, you can see that he is weakened, indicating the expert in the morning review: “At the beginning of November, when oil quotations were close to current levels, the ruble against the dollar and the euro was respectively 6% and 3% higher , than now”. The combination of rising oil prices and a moderate appreciation of the ruble should support revenues and lower spending of the Reserve Fund, she added. “The negative news for the Russian currency, which would interfere with its growth can be attributed recent placement of sovereign Eurobonds: the yield on the new issue was unexpectedly high.” – Says Lebedev

What will happen with the budget and expenditure ?

The federal budget for 2016 was imposed on the basis of oil price of $ 50 / barrel. But talking about the average price of Russian Urals brand. In the first four months, the average price, according to the Ministry of Finance, amounted to $ 33.9 / barrel, that is, to reach $ 50 by the end of the year, oil should rise in price even more and stay consistently above $ 60 -. The prospect is far from obvious. Russian Urals in April traded at a discount of $ 1.6 to Brent, so is not even overcome the psychological mark of $ 50.

Although the budget law has not been revised (the amendment to the budget, it was decided to move from spring to autumn ) and formally operate source predictive parameters, including the $ 50 per barrel of Urals, the de facto government is living on a reduced budget. In March-April, Ministry of Economic Development has revised the baseline projection for the price of Urals in 2016, lowering it to $ 40 per barrel, and the Ministry of Finance has prepared the relevant amendments to the budget based on $ 40 amendments include ten percent of so-called sequestration of unprotected articles (that is, without taking into account the costs of defense and security, and social payments). As long as they remain without a formal approval but had actually conducted sequester and the Ministry of Finance firmly “holds” costs. In the first quarter 2016 reduction in revenue and expenditure components of the budget amounted to around 20% in real terms (at the Ministry of Finance calculations RANHiGS data basis). Reducing significantly on most articles, including the defense and the national economy, but with the exception of social spending, which increased by 0.2 percentage points GDP (mastered ahead).

The budget deficit in January-April amounted to 4.7% of GDP, compared with the law laid down by 3%. To finance the deficit in April, the Ministry of Finance for the first time this year, mobilized reserve fund, taking it from 390 billion rubles., And had just placed Eurobonds for $ 1.75 billion (the first time since 2013). Growing interim deficit does not rule out the possibility of entering the planned 3% for the year “subject to a favorable economic situation and the persistence of the Government in achieving this goal,” analysts “VTB Capital,” wrote. They believe that during the year the dynamics of oil and gas revenues will gradually improve, and in the fourth quarter even possible growth YoY. The price of Brent crude in rubles – an indicator of revenue – in April 3000 exceeded RUR. a barrel, and today has reached 3268 rubles. (Bloomberg data), is the highest since October last year. However, Finance Minister Anton Siluanov estimates that the average price of $ 40 per barrel, the budget deficit will amount to 3.3% of GDP, ie it can go beyond the assigned Vladimir Putin in December, 3%.

Assistant to the President Andrew Belousov said today Tass that if oil prices stabilize at around $ 40, from the national welfare Fund (NWF) will be “painless” to spend another 50-100 billion rubles. for investment projects. Improved oil and gas revenues, and increases the likelihood of politically sensitive doindeksatsii pensions, which depends (spelled out in the budget law) from the budgetary performance in the first half. This week, Prime Minister Dmitry Medvedev during his visit to Crimea explained local resident: “We do not take [index]. Just no money right now. We will find the money – do indexing »

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