Gazprom Neft Premium to Parent Narrows on Oil: Russia Overnight

OAO Gazprom Neft, the oil unit of Russia’s natural gas export monopoly, fell in New York to trade at the smallest premium to its parent company in six weeks after crude slumped the most since July.

American depositary receipts of Russia’s fifth biggest oil producer lost 3.5 percent to $24.56 yesterday, sending valuations to 5.08 times estimated earnings. The company traded at a 58 percent premium to OAO Gazprom, the smallest since Aug. 8. The oil producer was the biggest decliner yesterday on the Bloomberg Russia-US Equity Index. The gauge of the most traded Russian companies in New York dropped 1.7 percent to 100.67. Futures on the RTS index rose 0.2 percent to 151,370.

Oil, which together with natural gas accounted for half of Russia’s 2011 budget revenue, sank 3.5 percent yesterday, the most since July 23, as crude inventories rose to 367.6 million barrels. Gazprom, the world’s largest natural gas producer, links its prices to oil and refined products with a time lag, a method that dates back to the 1970s, when the fuels were more commonly used in power generation.

“Gazprom Neft reacts to a drop in the oil price immediately and the reaction is much stronger than Gazprom’s,” Igor Nuzhdin, an analyst at OAO Nomos Bank, said by phone from Moscow yesterday. “The sharp decline in the oil price pushed Russian equities down. Gazprom enjoys a time lag.”

The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, fell 2.1 percent to $29.71. The RTS Volatility Index dropped 1.4 percent to 31.83.

‘Signal for Further Growth’

The Moscow shares of Gazprom Neft retreated 2.1 percent to 152.73 rubles, or $4.90 yesterday. One ADR is equal to five ordinary shares.

Gazprom fell 2.7 percent to $10.52 in New York, sending valuations to 3.22 times estimated earnings. Gazprom, controlled by the government, fell 1.9 percent to 164.61 rubles, or $5.28, on the Micex. One Gazprom ADR is equal to two ordinary shares.

RTS stock-index futures gained before today’s release of European and U.S. purchasing managers’ indexes, and a similar gauge of Chinese factory output by HSBC Holdings Plc and Markit Economics.

“Investors hope for good PMI data from China to Europe and the U.S.,” Nomos’s Nuzhdin said yesterday. “They hope to see a signal for further growth, a catalyst for stronger commodities and energy prices, which would help Russian equities gain.”

U.S. Manufacturing

Markit Economics is scheduled to release a preliminary index of U.S. manufacturing for September at 8:58 a.m. in New York today. The index was at 51.5 this month, according to the median estimate of 13 economists surveyed by Bloomberg News. A reading above 50 indicates growth.

A euro-zone composite index for manufacturing and services industries was probably at 46.6 this month, compared with the August reading of 46.3, according to the median estimate of economists surveyed by Bloomberg News. The release is scheduled for 4 a.m. New York time today.

A separate gauge by Markit and HSBC for manufacturing in China, which is based on a poll of purchasing managers in the industry, was at 47.6 last month.

Crude Falls

Oil tumbled to a six-week low after the U.S. Energy Department said yesterday supplies rose 8.53 million barrels last week, more than eight times what was projected in a Bloomberg survey. Imports arrived at the highest rate since January and output increased.

Crude oil for October delivery dropped to $91.98 a barrel on the New York Mercantile Exchange yesterday, the lowest settlement since Aug. 3. It was the biggest retreat since July 23. Futures are down 6.9 percent this year.

Brent oil for November settlement fell 3.4 percent to $108.19 a barrel on the London-based ICE Futures Europe. Brent, a benchmark for more than half of the world’s oil, including Russia’s main export blend called Urals, has risen from $89.23 on June 21, which was the lowest settlement since December 2010.

Urals crude, Russia’s chief export blend, lost 3.3 percent to $106.65 per barrel yesterday, the lowest since Aug. 2.

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