The reasons for the rebound
The drop in oil prices already reached its limits, given the recent agreement exporters OPEC+ from 6 December, on reduction of oil production by 1.2 million barrels per day, which exceeded market expectations. In the beginning of the week Russian energy Minister Alexander Novak tried to reassure investors, saying that the oil market will become more stable in the first half of 2019, because the agreement, which will enter into force from January, will restore the balance of supply and demand in the next six months.
Why we should expect a rebound in the price? First, because at current prices for crude oil WTI (us$43 per barrel) us companies unprofitable to extract shale oil, while the quotes will not recover at least to $50 per barrel.
Secondly, the next summit of OPEC exporters+ scheduled for April 2019, but, according to Novak, the oil-producing States to organize an emergency meeting at any time and to revise production quotas.
Third, the trigger for the growth of oil prices can be expected reversal in the stock market, which finally will go to growth. This is due to the fact that the President is Donald trump trying to reassure the markets by softening their rhetoric concerning Secretary of the Treasury Steven Mnuchin and fed James Powell.
As a result, the Brent can consolidate at $55 per barrel at the end of this year and open up growth in early 2019. Now the minimum value in the global consensus-the forecast of cost of oil is $60 per barrel in late 2018 and $58 per barrel for the first half of 2019.
The impact on the ruble
Despite the decline in oil prices since the beginning of October, the ruble fell against the dollar in just 5.6%. He showed good stability compared to other export currencies like Norwegian Krone (-7%) and Mexican peso (-6,3%).
In ruble terms, oil fell during that time up to 3500 per barrel, which is the lowest value since October of 2017. The Russian budget for 2018 has the price of a barrel of Brent at the level of 3225 roubles (this corresponds to the price of Urals oil at $50 per barrel at the rate of 64.5 rubles per dollar).
As a rule, the correlation between ruble and oil prices intensified with the proximity of oil prices to the level inherent to the Russian budget. Accordingly, until the market broke above $56 per barrel Brent ($54 per barrel Urals), this correlation was less than 50%, and further it has increased in the last ten days reached 80%.
Now the correlation between ruble and oil prices weakened again due to the high supply of foreign currency on the market on the background of tax payments, which takes place from 25 to 28 December. Their sum is expected to amount to 1.2 trillion rubles. For their financing exporters can sell about $4-5 billion, But given the additional revenue of rubles of budget expenditures at the end of the month, the actual sale of foreign currency may be lower.
The strengthening of the ruble also contribute to seasonal high surplus on the current account (for the first 11 months the surplus amounted to over $104 billion), suspending purchases of foreign currency in the market at the request of the Ministry of Finance and the high rate of refinancing debt. As a result, the ruble exchange rate in the next few days can return to the mark of 67 rubles to the dollar, although current oil prices are fair level is 73 rubles.