The price of Brent oil after a month’s break consolidated above $81 per barrel

The price of Brent oil, after a month-long break, consolidated above $81 per barrel. The price of Russian Urals is close to $70 per barrel. Prices were pushed up by information about a decrease in oil reserves and production volumes in the United States, as well as rising costs for transporting hydrocarbons due to ongoing Houthi attacks on ships in the Red Sea. But due to the time lag between the sale of oil and the arrival of foreign currency on the Russian market, the ruble exchange rate has not yet responded to the rise in oil prices.

The price of North Sea Brent oil rose above $81 per barrel on January 25 for the first time this year. On the spot market it reached $81.5 per barrel, the highest since December 26, 2023, according to Investing.com. This result was 1.5% higher than Thursday’s closing value. Quotations for Russian Urals oil, according to the ProFinance resource, rose to $69.5 per barrel. Since the beginning of the week, European oil grades have increased by 3.5–3.7%.

The current price jump was caused by data on oil and petroleum product reserves in the United States. On Wednesday, the US Energy Information Administration (EIA) reported that the country’s oil inventories fell by 9.23 million barrels in the week ended January 19, to 420.7 million barrels. Analysts surveyed by Trading Economics had forecast a 2.15 million barrel cut in inventories. Senior analyst at BCS World of Investments Ronald Smith draws attention to a stronger drop in total commercial oil reserves – by 22.3 million barrels – in the previous week.

However, according to Ronald Smith, data on US oil production, which fell last week to a five-month low of 12.3 million barrels per day due to frost in North Dakota and Texas, is fundamentally more important for the market.

At the same time, analysts do not expect a quick recovery in production if frosts weaken. “At least 300–400 thousand barrels per day will remain lost for several more weeks,” estimates Konstantin Samarin, senior analyst at SberCIB Investment Research.

High prices are also supported by the Houthis’ ongoing attacks on ships in the Red Sea. This leads to higher costs of freight around the world, in particular for oil tankers, as well as supply disruptions due to the choice of other transportation routes. In particular, according to BloombergOn Monday, the daily rate for transporting gasoline cargo from Northwestern Europe to the East Coast of the United States increased almost three times since the beginning of the year and reached $38 thousand per day. Because of the Houthi attacks, some tanker shipping companies have said they will no longer send ships through the Red Sea. The current situation, according to Ronald Smith, will have a positive impact on oil prices.

At the same time, the biggest winners, in his opinion, will be shippers and those oil companies that either have their own vessels or have fixed rates through long-term contracts.

Under the current conditions, the rise in oil prices will most likely continue, analysts say. Additional factors for price growth, according to Konstantin Samarin, may be data on OPEC+ production cuts in January. SberCIB Investment Research forecasts the average Brent price in the first quarter at $85 per barrel.

However, the increase in oil prices has not yet had a positive impact on the foreign exchange market. During Thursday’s trading, the dollar exchange rate on the Moscow Exchange reached a weekly maximum of 89.24 rubles/$, and at the end of the day it stopped at 88.89 rubles/$, which is 28 kopecks. higher than the closing values ​​of the previous day. As Vladimir Evstifeev, head of the analytical department of Zenit Bank, notes, what matters for the ruble is not the immediate cost of oil, but the average over a longer period (two to four weeks). In addition, the impact of the price level occurs with a delay of two to three months – a time lag, according to Central Bank estimates, between an increase in the price of oil and an increase in foreign currency receipts from export earnings to the Russian foreign exchange market. “From the ruble point of view, world oil prices remain a fundamental factor. And given the change in the parameters of the budget rule, the ruble is now more protected from low oil prices,” notes Mr. Evstifeev. Until mid-March, he expects the dollar exchange rate to be in the range of 87–90 rubles/$.

Vitaly Gaidaev