30.04.2019: Oil futures recover after recent plunge (RUB, BRENT)

April was a lucky month for the Russian currency. So far, it has been like this. However, the rally is unlikely to continue. One of the factors that shape the investor attitude towards the ruble is the dynamics of oil prices.
Recently, the ruble has managed to gain decent profits. Last week, currencies of the developing countries showed downward movements, but early this week the quotes retraced. A rally was boosted by the news that the United States and China reached the final stage of trade negotiations. Today, the USD/RUB pair was hovering near the level of 64.60 at the opening of the Moscow exchange. External factors will have a more profound influence due to long weekends, so the volatility in the pair will increase rapidly after the holidays. The US dollar is expected to be trading in the range between 63.50 and 66.50 rubles.
Furthermore, the Bank of Russia dropped a hint that the interest rate may be reduced in the second or the third quarter. This move can boost the demand for the Russian bonds and support the national currency.
The EUR/RUB declined by just 0.24% to 72 level. The Russian currency added fewer pips against the euro as the US dollar dived deeper.
Meanwhile, dollar traders are waiting for the outcome of the FOMC monetary policy meeting that will be held later in the day.
As for the oil market, the quotes were higher at the opening of the trading session. However, the sentiment is mixed as investors can only guess how OPEC will retaliate against the United States for slapping sanctions on Iran. Last week, Brent and WTI prices hit the highest levels since October 2018 after Donald Trump decided to cancel sanctions exemptions that were previously granted to some buyers of Iranian oil. However, the prices leveled out consequently.
The White House Administration has no doubts that other oil producers can easily offset the shortage of supplies that can arise due to anti-Iranian sanctions. At the same time, Saudi Arabia has not provided any comments yet. Lately, Donald Trump has been actively promoting low oil prices, but the Saudis need the quotes to rise to 85 dollars at least so they could re-balance the state budget.
Today oil futures are climbing which is a favorable sign for Saudi Arabia. The commodity has gained ground despite the disappointing report on Chinese industrial production. Thus, the Brent crude benchmark approached the level of 73 dollars per barrel. Probably, Tehran’s response to Washington’s decision encouraged oil investors. Iranian President Hassan Rouhani stated that his country was not going to reduce supplies. “America’s decision that Iran’s oil exports must reach zero is a wrong and mistaken decision, and we won’t let this decision be executed and operational” Rouhani said.
It seems that new turmoil can hit the markets soon. That is all for now. We keep close tabs on the markets developments. Stay tuned for the latest updates.


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