Ruble strengthens to 10-week high on firmer oil, ECB €1.14trn stimulus

2015/03/06
RIA Novosti / Maksim Bogodvid

Russian analysts suggest ruble growth is being mostly driven by the stabilization of Russia’s financial market. The growth comes “partly due to the rising crude oil price, partly thanks to the measures by the Central Bank of Russia (CBR) to stabilize the national currency because of its active action with the currency repurchase agreement [repo – Ed.] tools, which should stabilize the situation in a currency market amidst active payments of foreign corporate debt this month,” Sergey Kozlovsky, head of the analytical department at a broker Grand Capital told TASS.



WTI and Brent crude have been mixed in Friday trading. At the time of publication Brent was up at 60.84 a barrel , with WTI growing to $50.91 a barrel. The escalation of fighting in the northeast Iraq and a worsening security conditions in Libya have caused supply worries.


Vladimir Evstifeev, deputy head of analytical department at Zenit Bank, says investors now see fewer risks of a further oil price fall.


“The OPEC representative’s rhetoric that includes expectations of a lasting high oil demand, the operative statistics of its supply in the US and also more action from China’s authorities to stimulate the economic growth create some protection from a possible collapse in quotations,” he told TASS.


On Tuesday key OPEC member, and the world’s biggest oil exporter, Saudi Arabia said next month it will make the biggest discount cut in three years on Arab Light sold to Asia because demand is improving. This would cut the discount by $1.40, its biggest price increase since January 2012, according to data compiled by Bloomberg.


Saudi Arabia has been insisting it could perfectly survive a price as low as $20 per barrel.


READ MORE: $20 oil wouldn’t force production cut – Saudi oil minister


On a downside, some analysts fear the world could run out of storage capacity soon, triggering an even steeper fall in oil prices, as producers sell oil to the few remaining buyers with room to store it. The US is now supplying at the levels not seen in the past 80 years, and has filled about 70 percent of the nation’s storage capacity, according to data from the Energy Information Administration. A separate estimate by Citigroup shows European commercial crude storage could be more than 90 percent full.


In the case of the euro, Thursday’s ECB announcement of the start of its easy money policy is another big factor that’s dragging it down. Mario Draghi said the €1.14 trillion bond – buying program will kick off Friday.


READ MORE: Europe to start €1.14trn ‘easy money’ program on March 9 - ECB President


The latest US non-farm payroll data and rig counts to be released Friday will be the major oil drivers during the day. Iran nuclear talks also play a big part in oil pricing. Any sign of a long-term agreement between Iran and the six countries in the West would signal huge new supplies from Iran soon coming back on the market.


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