It was a day of high volatility in the oil market yesterday. In Saint Petersburg, an OPEC+ meeting took place, during which some pressing issues were discussed, particularly the agenda of Nigeria joining the agreement provided that within three months the country's production will be down to 1.8 million barrels per day, whereas Nigeria is ready to decrease its production by 4.6%. Another important statement was made by Saudi Arabia, which promised to cut considerably its oil exports in August - it resulted in an immediate increase in oil prices.
There was also a number of summary statements that were included in the meeting minutes of the monitoring committee, which comprised namely a requirement of 100% compliance with the production agreement between OPEC and non-OPEC producers. In addition, the monitoring committee recommended extending the agreement beyond the first quarter of 2018 if needed.
Amid these developments, Brent oil has approached the 50-day moving average. Taking into account the current technical picture, we may expect the rise to continue, targeting at $50-51 per barrel.
For the ruble, apart from an OPEC+ meeting, the factor that determines the short-term dynamics will be a decision by the US on sanctions against Russia, the extension of which is just a mere formality now. In the light of this, there were sales of the Russian federal debt bonds (OFZ) and consequently fixing of carry trades. Meanwhile, such technical indicator as the RGBI went down by almost 1%.
From a technical point of view, the medium-term corridor of the USD/RUB pair remains unchanged. We are expecting consolidation within a range of 58-57 as the lowest and 61-62 as the highest border. In the short term, the currency pair has greater odds of continuing its rise to the area of the upper border of the diapason. Meanwhile, EUR/RUB reached its local high at 69.66, which makes its possible for the currency pair to keep rising up to the 70.5-71 level area.
Ivan Kapustyanskiy, equity analyst at Forex Optimum