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oil

  • 12
    FEB15
    RUB: oil down further

    ... currencies: NOK weakened 0.9% against USD, while NGN lost 2.2%; AUD and NZD were 0.5-0.7% down. Trading flows in USDRUB remained subdued, with total MICEX turnover just USD 3.2bn yesterday. In the morning, RUB opened under pressure on the back of the oil correction: at noon, USDRUB traded near 66.30 before moving up to 66.75 toward the evening. However, late in the session, RUB regained ground, apparently amid some optimism regarding the outcome of the Normandy Format group meeting in Minsk. RUB closed ...

  • 11
    FEB15
    RUB: crude oil correction weighs on risk sentiment

    Yesterday, trading flows remained subdued, with total USDRUB turnover in the MICEX of just USD 3.3bn. During the day, RUB traded heavy amid a sluggish performance from crude oil. Hence, Brent ended 1.5% down at USD 56.3/bbl, while nearest futures (CO1) slipped 3.3% to USD 56.4/bbl. In addition, the EM FX index declined 0.6-0.8% vs. USD with ZAR and TRY down around 0.8%, whilst BRL slipped 2.2%. USDRUB kicked off near 65.20 ...

  • 6
    FEB15
    Oils – adjustments to tax manoeuvre parameters might not be introduced before 2H15

    ... 2H15. No details have been provided yet. We have said on a number of occasions that the tax manoeuvre, introduced on 1 January 2015, might have unpredictable consequences, which means manual governmental interventions ahead. Lower global prices for oil and oil products, along with a significant depreciation in the rouble, mean that its effect could well differ significantly from what was initially planned. According to our calculations, the likely result is that profitability at many of Russia’s ...

  • 3
    FEB15
    RUB: it’s all about oil

    Yesterday, the Russian FX market surprised, as USDRUB spiked to 70.40 during the early trading hours, completely ignoring Friday’s rally in crude. To a certain extent, the morning’s downward correction in the oil market justified the sluggish performance of RUB. However, crude later bounced once again, with Brent closing up almost 6.0%, at USD 53.7/bbl. In light of this, USDRUB dropped to 68.32 at the end of the day, so RUB firmed 1.7% in the end. USDRUB total ...

  • 2
    FEB15
    RUB: unexpected rate cut; crude oil rally

    ... expectations and it was enough to re-balance the banking system through higher savings. On the other hand, the CBR projects a 3.2% GDP drop in 1H15. Combined, these considerations justified the rate cut. However, in the evening RUB turned a corner as the crude oil market bounced; in particular, Brent rallied 8.4% to close at USD 50.77/bbl, while the nearest futures (CO1) moved up to 52.99 (+7.9%) amid news of a continued and accelerating decline in US oil drilling. Hence, at the end of the day USDRUB closed ...

  • 28
    JAN15
    RUB: supported by crude oil

    Yesterday, RUB pared Monday’s post-S&P weakness: by the end of the day, it had firmed near 1.4% against USD (67.52). Partially, this happened because of EUR’s bounce, but the key driver was the crude oil market. Brent gained almost 3.0% to USD 46.5/bbl, while the nearest futures scratched the USD 50.0/bbl threshold. Meanwhile, the EM FX index closed nearly flat; ZAR slipped 1.1%. RUB outperformed other commodity-based currencies, like NOK (which gained ...

  • 13
    JAN15
    RUB: no relief in oil

    Yesterday, trading flows remained subdued in the Russia FX market, with total MICEX turnover of just USD 2.6bn, well below the normal daily figure. The performance of crude oil remains the key focus for RUB traders: Brent declined 5.8% to USD 46.50/bbl, which was hardly encouraging for commodity-based currencies. Hence, NOK weakened 1.2% and NGN lost 1.4% against USD. In general, the EM FX index closed 0.3% in the red. RUB ...

  • 12
    JAN15
    RUB: following crude oil

    Since the beginning of the year (we use 30 December as a reference point, i.e. the last trading day in the Moscow exchange) RUB has weakened 9.0% against US to 62.04 in a fairly illiquid market. Thus, trading flows over the last week were generally below USD 1.0bn due to the long New Year public holidays in Russia. Hence, the bulk of USDRUB trading was offshore. Meanwhile, Brent crude slipped about 10% YTD to the USD 49/bbl area, which was the main source of pressure on the Russian currency, we think...

  • 9
    DEC14
    RUB: can’t resist the oil

    Yesterday, RUB weakened 1.7% against USD, closing at 53.80 amid fairly low trading activity: total turnover in the MICEX was just USD 3.6bn. A triple-whammy of disappointing economic data, alongside fresh slippage in the oil price, was the main focus for markets yesterday. The latest trade data for China featured slower export growth and a 6.7% decline in imports. In Japan, real GDP growth for 3Q14 was revised down to a 1.9% annualised decline. Hence, EM FX index slipped ...

  • 3
    DEC14
    Oils – potential tax on financial results

    ... a new draft law to the Duma to replace MET with tax on financial results (TFR) by the end of the year, Vedomosti reports. The tax could be 60% of revenues decreased by operating costs. The authorities are considering a number of fields, including Lukoil, Gazprom Neft, Salym Petroleum and Surgutneftegaz, to serve as pilots to analyse the new rules over the course of three years. The Ministry of Finance has yet to examine the document. Given the lack of details, it is difficult to calculate the exact ...

  • 3
    DEC14
    RUB: underperforming crude oil

    ....50-11.00% do not look high at all. In addition, there was Brent’s near 2.2% decline, which also produced some pressure in NOK (-1.3%). Finally, the Ministry for the Economy announced revised economic forecasts for next year based on an assumption of oil at USD 80/bbl. Consequently, the Ministry sees the average USDRUB rate at 49.00 next year. We estimate RUB’s fair value at 42-43 against USD at these crude oil levels. Nevertheless, given that spot Urals is below USD 70/bbl, the message was negatively ...

  • 1
    DEC14
    Russian/CIS bonds: poisoned by weak oil

    On Friday, Russian/CIS bonds corrected down following the drop in crude and weakening FX. In high grade, long oil and gas names were under pressure: Rosneft’s issues fell near 1.0pp in price, SIBNEF 23 (YTM 7.30%) sagged 0.7pp in price, and the belly and the long end of the LUKOIL curve slipped 0.5-0.9pp in price, having widened in yield 13bp. Mid-term GAZPRU ...

  • 28
    NOV14
    RUB: oil lubricates slipway of decline

    ... against USD to close at 48.60. As we suggested, downward pressure on crude meant visible negative sentiment for RUB and other commodity-based currencies. In particular, NOK declined 1.20% as Brent fell 6.1% to USD 71.7/bbl. OPEC refrained from cutting oil production, leaving its output target at 30mmb/d. More disappointing was the absence of a commitment to adhere to the 30mmb/d ceiling (7 months out of 10 this year have been above 30mmb/d). Overall, we believe that the meeting puts the risks for Brent ...

  • 28
    NOV14
    OPEC refuses to cut – issues challenge to US tight oil

    OPEC maintained its 30mmb/d target and refused to cut production. GCC oil ministers stated that oversupply was not OPEC's problem; the market will ‘fix it’ and new high-cost non-OPEC production must now play a role in balancing the market. This effectively suggests OPEC is happy for prices to fall as low as needed to ...

  • 18
    NOV14
    Oils – suggestion to introduce excess profit tax for projects with export duty reliefs

    ... profit tax (EPT) for projects with export duty reliefs. At the same time, the potential introduction of the proposed tax changes might be delayed, the paper says. Our initial calculation, based on the 2014 numbers, suggests that in the case of EPT (with oil operating income being subject to the tax), the tax rate for some average brownfields might not be lower than the current MET rate. Therefore, introducing EPT would not be beneficial for the Russian oil industry, we think. As such, we would see any ...

  • 10
    NOV14
    Oil and Gas - No rush

    This morning, we have published Russian oil and gas: No rush. The front page is given below. Russian O&G has been outperforming the wider Russian market, in line with its usual historical role as a defensive low-beta sector and now also supported by harsh RUB devaluation. Nevertheless, the ...

  • 7
    NOV14
    Oil and gas companies – terms of a number of licenses softened

    The Federal Agency on Subsoil Usage has changed the terms of 165 licences owned by Rosneft, Gazprom, Novatek, Surgutneftegas, Bashneft and Tatneft, Vedomosti reports. The changes might relate to their periods. Among potential reasons for the changes are the negative macro environment,...

  • 24
    OCT14
    Oils – wholesale gasoline prices decrease – price dynamics in line with our expectations

    ... gasoline has declined 2.7% and 5.2%, respectively, for the last week. We forecast retail gasoline prices to remain broadly flat YoY in USD terms in 2014 in Russia, so the price dynamics are currently in line with our expectations. The key risk here for oil companies is potential government intervention on the market with the intention of putting more control on the retail business in Russia. That would impact the profitability of the retail business, in our view. To recap, wholesale gasoline prices ...

  • 23
    OCT14
    RUB: can’t resist oil

    ... yesterday Ksenia Yudaeva, First Deputy Chairman of the CBR, said that the regulator was going to resist the speculative and panic pressure on the FX market, which might pose a threat to financial stability. However, the main caveat is that increased crude oil volatility makes it hard to distinguish between fundamental adjustments and speculator activities. Hence, we think the CBR is to continue with its current FX intervention policy in the near term.

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