Lukoil Rebounds From 2015 Low as Crude Rally Outweighs Sanctions

  • Oil, Russia's main export, rose for the first time in six days
  • Futures on dollar-denominated RTS Index rise in U.S. hours

Lukoil PJSC rose for a second day in New York, widening its advance from this year’s low, as oil’s biggest rally in seven weeks outweighed increased U.S. sanctions against Russia.

Russia’s second-largest oil producer rose 5 percent to $33.23 in U.S. trading, bringing its two-day gain to 5.4 percent. The stock jumped 4.6 percent in London, the most in seven weeks. A gauge of Russian stocks in London and the dollar-denominated RTS Index in Moscow each advanced 3 percent.

Stocks rallied as Brent crude, the oil grade traders use to price Russia’s main blend, rose to a one-week high after U.S. data showed crude inventories declined, easing a supply glut. The U.S. Treasury Department expanded sanctions linked to Russia’s role in the Ukraine conflict on Tuesday, adding 34 companies and people to its list. The European Union on Monday renewed its punitive measures against Russia for another six months.

“The market didn’t seem to notice these sanctions,” Vladimir Vedeneev, the chief investment officer of Raiffeisen Asset Management in Moscow, said by phone Wednesday. “Traders are following the advance in oil, but there is a lot of doubt that this rebound will be long-lived.”

Oil Rebound

U.S. crude supplies fell 5.88 million barrels last week, the biggest drop since June, according to the Energy Information Administration. Brent rose 3.5 percent to $37.36 a barrel in London. Oil is heading for a second yearly loss on signs the global glut will be prolonged after the Organization of Petroleum Exporting Countries effectively abandoned output limits at a meeting earlier this month.

Oil at $35 a barrel will cause a decline of as much as 3 percent in gross domestic product next year, the central bank of Russia said this month. JPMorgan Chase & Co. reversed its call for 0.5 percent growth next year, predicting a 0.2 percent contraction instead, while the World Bank worsened its forecast to a decline of 0.7 percent.

The Market Vectors Russia ETF, the largest exchange-traded fund tracking Russian equities, advanced 4 percent to $15.16. Futures contracts on the RTS Index expiring in March added 0.9 percent to 79,290 in U.S. hours.

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