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23.02.2021: Will oil hold at new highs? (Brent, USD/RUB).

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Oil is trying to stabilize at new highs after Brent has broken above the level of 66 dollars a barrel. Analysts warn that the stage of correction may start at any moment. The ruble may open tomorrow’s session with a rapid downside movement as traders are likely to focus on political tensions rather than on the oil market. According to experts, the oil market has been overbought lately, and the price of 60 dollars a barrel for Brent seems to be the most reasonable one. The most realistic price range for oil is the channel between 55 and 60 dollars a barrel. Markets have been waiting for a correction for several weeks, but oil is following its own trajectory. Today, oil bulls have managed to push the quotes to new highs, with Brent reaching the mark of 66 dollars a barrel for the first time since January last year. However, the pace of decline has slowed down and the price slipped below this level. So, oil buyers had to retreat to 65 dollars a barrel. In the European session, Brent contract with the nearest expiration was trading at 64 dollars 70 cents a barrel. WTI futures for April settled just above 62 dollars a barrel. Both oil benchmarks are trading at high levels supported by previous positive factors. Investors are encouraged by the current OPEC+ agreement to keep the output low in February and March. Market participants also hope for a stronger fuel demand as the global economy continues to recover. Meanwhile, the main driver for oil is the disruption of oil production in the US due to the abnormally cold weather. A deep fall in the US crude output will help maintain the balance in the energy market. This gives more confidence to oil bulls who are ready to develop another rally. The overbought market conditions are mainly caused by the rollout of a mass vaccination program against Covid-19. Oil is heading for new highs, while market experts insist that a correctional decline is about to start soon. Crude prices are unlikely to hold at the current levels. The quotes are expected to slide as soon as weather conditions improve in the US and traders switch their attention to other topics. Investors will soon focus on the upcoming meeting of the OPEC. The ruble is trading quietly today although it reacted to a surge in the oil market that gained nearly 4% on Monday. At one point, the US dollar broke above the mark of 75 rubles for the first time since February 5. Later, the dollar/ruble pair returned to the level of 74. In the short term, the outlook for the ruble remains neutral. It is expected to hold within the range of 73 and 75 against the dollar. This scenario will stay relevant as long as the risk-on sentiment prevails. However, amid the deterioration of the market sentiment and the mass escape from risk assets, the US currency will attempt to rise to last-year highs. The next upward target for the US dollar is seen at the levels of 76.5 and 77. In case the price breaks through this range, the ruble may fall to as low as 80 against the greenback. The threat of sanctions against Russia remains high on the agenda. The US has also announced new restrictive measures against the Nord Stream 2.

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