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22.02.2021: Traders look for more hints on RUB (Brent, USD/RUB).

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Oil was up on Monday morning although investors are concerned about a correction that may continue after a 15% rally that has been going on since early February. In case of a downtrend in the oil market, the bearish trend on the ruble will intensify. However, the US dollar may stop at the mark of 75 rubles. Unless the geopolitical situation gets worse, the ruble may gain support from the tax payment period and settle at the level of 73 against the dollar. Oil prices grew on Monday amid uncertainty around output recovery in Texas that was hit by abnormally cold weather. On Sunday, some of the refineries resumed operation, but it is still not clear when the output will return to the previous levels. Meanwhile, market participants continue to downplay the latest industry data showing a deep drop on US oil inventories. The reason for this may be the fact that the latest data does not give a full picture. Oil reserves will be filled again as soon as crude production begins to recover. The resumption of crude output in Texas weighs on the oil quotes. Besides, the possibility of easing output curbs by the OPEC+ serves as another limiting factor for oil. This decision may be approved during the next OPEC meeting on March 4. The market faces some reasonable fundamental background that confirms the downward correction on oil. Brent quotes may well decline to the level of 60 dollars per barrel. A lower target will be also possible if additional bearish factors emerge. Today, Brent oil futures for April are moving slightly higher. The quotes rose by more than 1% but bulls quickly lost momentum. As a result, the contract slipped below 63 dollars a barrel. WTI futures contracts with the nearest expiration are following the same direction. The North American crude was last seen trading at 59 dollars 50 cents per barrel. In the meantime, the ruble is hovering near the 73 mark against the US dollar. It made several attempts to break through this strong support but all of them ended with a new round of decline. The same situation happened today. The ruble closed the previous session in negative territory. On Monday, it opened the trade with a sharp drop against the US dollar, having lost more than 1% of its value. So, the dollar/ruble bulls got the chance to break through the usual trading range of 73.00 and 75.00. The geopolitical background as well as the demand for the Russian federal loan bonds are the two factors to determine the ruble’s dynamics. Today, the European Union will discuss new sanctions against Russia. If no harsh measures are taken, the ruble is expected to hold within the current trading channel. The breakthrough of the 75 level will probably have a short-term nature. On the side of the Russian currency is the strong trade surplus and the peak of the tax payments on February 25. In the short term, the outlook for the ruble is favorable. Global economy is on track to recover, supported by the easing of the monetary policy in western countries. This, in turn, boosts oil demand. The ruble continues to lag behind compared to the pace of recovery in oil prices. Oil has already returned to pre-pandemic levels, while the ruble is still 13% lower.

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