21.10.2020: RUB heads for 75.00 vs USD in short term (Brent, USD/RUB)

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Oil prices slipped into negative territory on Wednesday morning. Traders evaluated the bearish data from the API on crude inventories in the US. The ruble tested the support of 77.00 against the US dollar, but failed to settle there.
Brent oil contract with the nearest expiration lost 1% of its value to trade at 42 dollars 50 cents in the mid-session. WTI oil futures for December showed similar losses and fell below 41 dollars per barrel.
Oil demand remains sluggish and is unlikely to improve, given the rapid rise in coronavirus cases all over the world. What is more, yesterday, the American Petroleum Institute reported a rise in US crude stockpiles. Besides, Libya continues to ramp up its oil production. On Monday, it resumed the output in one more oil field. Thus, Libya's crude output has increased by more than four times within a month.
Today, investors are looking ahead to the official report from the US Energy Information Administration. If the report confirms the data from the API, market sentiment will certainly worsen, and Brent may return to the levels seen early last week when it was trading below 42 dollars a barrel.
Although the energy market is under pressure, traders maintain an optimistic outlook. Oil bulls gain support from the recent meeting of the OPEC+ ministerial monitoring committee. The OPEC noted a high compliance of its members with the agreement on output cuts. Investors hope that amid increasing supply in Libya and weak oil demand recovery, OPEC+ will revise its plans to boost production by 2 million barrels per day.
The struggling US dollar also serves as a bullish factor for oil. A weaker dollar makes oil more attractive to investors since the black liquid is a dollar-denominated commodity.
Early in the day, the demand for risk assets has slightly improved, with the US futures gaining in value. Meanwhile, the US dollar continues to decline. However, traders should be cautious because recently market sentiment tends to change rapidly after the US stock market opens.
Yesterday, the ruble showed relatively good results, having broken through the support of 77.50 against the US dollar. Today, the ruble has shortly moved below the strong support of 77.00. Despite the failed attempt to settle there, the ruble still managed to hold in positive territory. In the day trade, the Russian currency advanced by 0.3% against its American counterpart.
Shortly, the ruble may again test the mark of 77.00 given that the background remains stable and the peak of the tax payments in Russia is approaching. A short-term decline of the dollar/ruble pair to the 75.00 level is also quite possible.
The dollar/ruble pair is currently trading in the range between 75.00 and 77.50 due to a stable background, weakness of the US dollar, and strong internal support. However, there is still a risk that the US dollar may again rise above 77 rubles 50 kopeks.

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