RTS Futures Slip as Oil Bets Pull Back: Russia Overnight

Russian stock futures fell after crude declined for a second day and investors cut bullish commodity bets on concern U.S. lawmakers won’t reach a budget agreement, sending the world’s largest economy into a recession.

Russian equity futures expiring in March on the nation’s dollar-denominated RTS Index slipped less than 0.1 percent to 151,520 in New York, where markets were closed for the Christmas holiday. Futures contracts on Russia’s ruble showed the currency strengthening 0.1 percent to 31.08 per dollar after the ruble fell 0.6 percent to 30.73 in Moscow yesterday.

The 30-stock Micex Index added 0.1 percent to 1,473.87 yesterday, capping a 5.1 percent advance this year. Russia, the world’s biggest energy exporter, stands to lose if U.S. legislators fail to meet a year-end budget deadline for tax increases and spending cuts, known as the fiscal cliff, that may push the country into a recession and weaken global demand for commodities. The world’s biggest natural gas producer and largest aluminum company are both based in Russia.

“The U.S. will probably avoid the ‘fiscal cliff,’ but for the present, no one is really sure,” Ivan Manaenko, the head of research at Veles Capital LLC in Moscow, said yesterday in a phone interview. “This debate isn’t good for the short term for risk asset classes, for example, Russia. So, Russia’s economy would be negatively impacted if there is no agreement though we think this problem will be solved.”

Crude Declines

Crude, Russia’s chief export earner, dropped for a second day on Dec. 24, falling 0.1 percent to $88.61. Brent oil for February settlement fell 17 cents on Dec. 24 to $108.80 a barrel on the London-based ICE Futures Europe exchange.

Hedge funds and money managers reduced net-long commodity positions to the lowest in almost six months, cutting bullish bets across 18 U.S. futures and options by 5.6 percent to 758,256 contracts in the week ended Dec. 18, the lowest since June 26, U.S. Commodity Futures Trading Commission data show.

U.S. lawmakers won’t vote until after the Christmas holiday on legislation to avert more than $600 billion in automatic tax increases and spending cuts scheduled to start in January. House Republican leaders on Dec. 21 scrapped a plan to allow higher taxes on incomes of more than $1 million.

Volume traded on RTS Futures was 35 percent of its average three-month daily volume, according to data compiled by Bloomberg.

Oil Contract

OAO Lukoil, Russia’s second-biggest oil producer, won the rights to three fields in western Siberia beating the other two bidders, state-run OAO Rosneft and OAO Gazprom Neft. Lukoil, the country’s biggest private oil producer has been expanding internationally, with projects in West Africa, Venezuela, Saudi Arabia and Iraq because of a dearth of new fields at home and declining output at older fields.

OAO Inter RAO UES jumped 2.1 percent in Moscow after Vedomosti reported Russian President Vladimir Putin ordered the government to speed up Rosneftegaz’s acquisition of 40 percent of OAO Irkutskenergo, which belongs to Russia’s third-largest power producer.

Trading in crude on the New York Mercantile Exchange was closed yesterday, as was brent oil trading on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief oil blend, was little changed at $108.66 a barrel on Dec. 24, and has gained 2.8 percent in 2012.

The RTS Volatility Index, which measures expected swings in the index futures, rose for a fourth day, adding 0.4 percent to 21.65.

The Bloomberg Russia-US Equity Index of the most-traded Russian companies in New York fell 0.5 percent on Dec. 24 to 97.02, led by OAO Rostelecom, Russia’s dominant fixed-line operator, which dropped 2.7 percent to $23.26. The gauge is up 7.1 percent this year. U.S. markets resume trading today.

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