Ruble Rebounds as Brent Erases Losses in Wake of Doha Failure

  • Correlation between oil price and ruble remains near a record
  • Oil and ruble `overreacted' after Doha: Capital Economics

The ruble erased losses, rebounding with Brent crude, amid speculation the market made too much of a failure by oil producing nations to broker an output freeze at a weekend summit in Doha.

Russia’s currency traded up 0.3 percent at 66.2280 per dollar as of 7:35 p.m. in Moscow. The ruble earlier declined as much as 3.5 percent as oil, the nation’s biggest export earner, plunged to a 10-day low of $40.10 per barrel before recovering to gain 0.2 percent to $43.17 per barrel in London.

“The market overreacted in the immediate aftermath of the Doha meeting,” said Liza Ermolenko, an analyst at Capital Economics Ltd. in London, who believes oil and the ruble will remain near current levels through the end of the year. “Since then oil has bounced back, and the ruble has come with it. Nothing has really changed since before the Doha meeting so the ruble has gone back to where it was trading at before.”

Oil and natural gas account for about a third of Russia’s budget revenue and almost 60 percent of its exports. The 60-day correlation between the ruble and Brent crude reached a record 0.85 on Friday and traded at 0.83 on Monday. A value of 1 would mean the assets are moving in lockstep.

Oil in London rebounded as a worker strike in Kuwait cut output for a second day.

The Micex index of major Russian stocks fell 0.8 percent, retreating for a third day to the lowest since April 8 as energy producers Gazprom PJSC and Lukoil PJSC declined. Government bonds were little changed, with the yield on five-year notes at 9.36 percent.

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