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Photographer: Simon Dawson/Bloomberg

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Top Forecaster Says OPEC+ Will Keep Ruble's Winning Run on Track

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Top Forecaster Says OPEC+ Will Keep Ruble's Winning Run on Track

  • Ruble to a take temporary hit from oil in 2Q: SEB’s Hammarlund
  • SEB sees Russia, Saudi Arabia to help boost oil prices in 3Q
Ukrainian Hryvnia And Russian Ruble Currency Banknotes As Ukraine Tensions Rise

Photographer: Simon Dawson/Bloomberg

The most-accurate ruble forecaster is more interested in Saudi Arabian oil officials than Washington lawmakers when it comes to predicting whether the Russian currency will keep its place as the best-performer globally.

While the threat of tougher U.S. sanctions on Russia has abated, Per Hammarlund, chief emerging markets strategist at Skandinaviska Enskilda Banken AB, is confident oil output cuts under the OPEC+ deal will hold, keeping crude prices -- and the ruble -- buoyant, despite a recent lurch lower.

Ruble's stumble is probably temporary amid lower oil prices

“I expect this fall to be temporary, primarily because Saudi Arabia and Russia have pledged to not oversupply the market with oil,” said Hammarlund, who was the top ruble forecaster in the first quarter, according to a ranking compiled by Bloomberg. “I think they will manage production in such a way that oil prices will start to recover in the third quarter and into the fourth quarter.”

Read More: Oil Closes Week on Rebound as Saudis, Russia Pledge Coordination

Traders got a sharp reminder of how the U.S. trade war with China and tariff threats against Mexico can hurt Russian markets, as Brent’s worst four-day drop since 2016 halted a run of weekly gains for the ruble. But Saudi Arabia’s top oil official said he was sure that OPEC+ will extend production cuts into the second half of the year after holding talks in St. Petersburg. Brent was trading back above $62 per barrel on Friday.

The ruble could slip to 66 per dollar by the end of the second quarter, as trade tensions keep crude under pressure, Hammarlund predicted. As oil recovers, the currency will climb back to 65 in the third quarter, and 64.5 at the end of the fourth, he said. The ruble added 0.4% on Friday to 64.8050 per dollar, giving it a 7.7% rally in the year to date.