Last night with weaker dollar, oil price have cleared the initial resistance hurdles.
- WTI is currently trading at $56/barrel, after clearing the sell orders around $54/barrel last night.
- Weaker inventory rise has in US has also helped the oil bulls to move to the next zone. Crude inventory rose by 1.294 million barrels, weakest increase since January this year. Operating oil rigs have fallen below 800 to 760. Total operating rigs including natural gas has fallen close to 2009 level.
- Brent crude is now trading at $62.75/barrel, after clearing $60/barrel level.
Ruble bulls as of now cheering the move clearing resistance around 50 mark.
- Ruble is now trading close to 49.50 against dollar, posing a bounce back after trading 48.4 intraday.
However it is too early to say, that oil is rebounding for now and it is going to be better for Russian economy.
- Russian crude is facing tough competition in Asia and Europe from Middle East as well as African producers. With close 10 million barrel/day production Russia need to keep its customer base intact.
- Moreover, excessive strength in ruble may not now be in Russia’s oil interest. Higher ruble brings lower oil revenues in local currency that might keep pressure on Kremlin’s budget.
It will be a bumpy ride for ruble bulls.
- Volatility has been rising in Ruble as it approached support area. Realized 5 day average volatility now stands close to 5.5%, up from 3.5% last month.
The material has been provided by InstaForex Company – www.instaforex.com