MOSCOW, 11 January /Corr. Nikita Zharkov/. The price of Brent crude oil fell for the first 6 trading days of 2016 by 12%, Atanov the ruble and the Russian stock market. Trading in futures on the Brent oil began in current year 4 January and five consecutive sessions ended with the fall of the price. On January 11 the decline in oil prices continues – the price of the futures contract for delivery in February on oil Brent during trading on the London stock exchange ICE fell by 2.12 per cent to $32,84 per barrel.
A significant acceleration of the decline in oil prices took place on 6 January at the background of the decisions of the state company of Saudi Arabia Saudi Aramco to increase discounts on the basic grades of oil for consumers from Europe. So, the price of a barrel of North-Western Europe decreased $0.6 and $0.2 for the countries of the Mediterranean region. However, for American buyers a barrel of oil Extra Light dropped $0,5.
The Central Bank of Russia increased by 12 January, the dollar exchange rate to 75,95 of the rouble, the Euro rate to the ruble 82,81
“The news that Saudi Arabia lowered oil prices to Europe sparked a new wave of pressure on the oil market, therefore the price of Brent crude on Thursday was closer to $32 a barrel,” analyst at VTB Capital Maxim Korovin.
The prices for oil will remain low for a longer period of time, adds the chief strategist at Sberbank CIB market currencies and interest rates, Tom Levinson. “The renewed fall in the prices of Brent oil, now fallen significantly below the low of 2008, putting strong pressure on the ruble”, – draws the attention of the strategist.
On the morning of 11 January, the dollar against the ruble on the Moscow stock exchange increased in comparison with level of closing of previous trading session by 1.55 rubles and amounted to 76,31 rubles, exceeding the mark of 76 rubles for the first time since December 16, 2014. In addition, the Euro was up 3.35% 83,97 RUB marks
However, some hope for the restoration of the ruble have, says chief economist for Russia and CIS ING Bank Dmitry Polevoy. According to him, some support for the ruble may soon obtain from the approaching tax period, as well as positive seasonality of the balance of payments of the Russian Federation.
“Overall, judging by the dynamics of the ruble, oil prices, which has made new lows since 2010 at the level of 2480 rubles a barrel on Brent, ruble does not feel as bad as you would expect at the current level of oil prices”, – said Field.
As of 16:00 Moscow time the ruble regained some of the morning losses. So, the dollar reduced the increase to 57 cents and is 75,33 of the ruble, while the Euro reduced the increase to 1.31 per ruble at the level 81,93 ruble.
First trading days of 2016 on the Russian stock market
Trading on the Russian stock market during the festive week was held 4-6 January, and last Thursday and Friday trading on the Moscow stock exchange was not conducted. Nevertheless, on 7 and 8 January Brent crude managed to drop another 3%, reaching the mark 32,16 USD per barrel for the first time in 11 years. To wager that the dynamics of oil prices the Russian stock indexes started from the beginning of trading on January 11. Already at the opening of trading Monday, the ruble MICEX index fell 2.98% to 1696,49 points, dropping below $ 1,700 points for the first time in October 2015. Dollar-denominated RTS index fell 4.77% to of 701.8 points.
The impact on the Russian stock market was provided not only by oil. The rapid collapse of the Chinese stock exchanges at the beginning of 2016 put significant pressure on all global markets – from emerging markets to European and American markets.
The ruble is falling and growth
About what will happen to the ruble, according to experts – special project
The most important factor contributing to the decline in equity markets and decline in oil prices, the turbulence in China, analyst from Sberbank CIB Cole Axon. “The refusal of the Chinese government on support measures implemented in the recent period of high volatility, the trading is paused for two days in connection with sharp falling of quotations, a significant capital outflow of over $100 billion in only one month, the steady weakening of the Chinese currency against the dollar – all it has alarmed world markets”, – says the expert.
The Shanghai Composite index, reflecting the situation on the Shanghai stock exchange, since the beginning of last week has lost about 15%. A decline of 7% in the first trading day of the year led to the launch of new mechanism of stabilization of trading Chinese regulator. So, January 4th in China was introduced automatically halted in case of a serious drop indexes. However, due to multiple stops trading new mechanism did not contribute to stabilization, but on the contrary, intensified the panic among investors. As a result the monetary authorities announced the lifting of the “crisis” of the system on 8 January.
Amid panic in China-European stock index Euro Stoxx 50 last week decreased by 7.2% and S&P 500 has lost almost 6%, the Dow Jones index fell by 6.2% and the NASDAQ fell by 7.3 per cent.
All sharp fluctuations in the prices of Russian shares at the opening of trading caused by the gap due to long weekend, during which the world has seen dramatic developments, said the head of operations on the Russian stock market IR “freedom Finance” George Vashchenko. According to him, strong panic in the Russian stock market is not observed. “The situation is absolutely not like catastrophic. The MICEX index may bounce up from the psychological level of 1700 points in the case of a market reversal, the potential rebound is estimated at 4-6% to the end of the week,” predicts the expert.
Prices for Brent crude and the dollar
Prices for Brent crude and the dollar. Infographics