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20.01.2021: Oil awaits new drivers (Brent, USD/RUB).

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Oil continues to rise, but the optimistic mood is unstable. The quotes may turn to the downside in the coming sessions unless new drivers appear. Traders’ enthusiasm is fueled by expectations of new stimulus measures for the US economy. On Tuesday, Janet Yellen urged US lawmakers to act big on the relief plan. This means that financial aid will be quickly allocated and distributed in the near future. Investors hope that massive support measures will boost oil demand and limit supply. However, the overall market reaction to Yellen’s testimony was rather weak probably because it was widely expected. Besides, the topic of the US dollar and interest rates has already been covered. The Secretary of the Treasury nominee thinks that the rate of the US dollar should be determined by the markets, just as experts had predicted. At the same time, Janet Yellen did not mention anything about the policy of a strong dollar. Perhaps, the US does not really need a strong dollar at the moment. The US dollar index extended the downtrend, thus giving rise to the oil prices. However, investors may show a delayed response to the speech of the US finance minister. They can change their mind after a more detailed review. Still, her comments give some hope to the markets. Global oil benchmarks closed the previous session in positive territory and continue to develop an upward wave on Wednesday. In the mid-session, Brent crude was trading above 56 dollars a barrel, having gained more than 1%. WTI futures contract with the nearest expiration settled at 53 dollars 50 cents per barrel. Despite hopes for an upcoming stimulus program, market participants are still concerned about a short-term outlook for oil demand. The International Energy Agency has downgraded its outlook for the global oil consumption in the first quarter due to tight lockdowns and border closure. Thus, Germany has extended the lockdown until February 14. Positive sentiment in the oil market may end very soon as the current oil prices look overrated and seem much higher than the average yearly forecast. In the lack of new drives, correction on oil will be inevitable. Today the background is neutral, and oil is still trading higher. This provides support to the Russian ruble that managed to win back some losses from Monday. In today’s session, the ruble has gained almost 0.5% against the dollar and is now approaching the level of 73. It does not necessarily mean that it will easily break through this level. The dollar’s support is still very strong. The rise in oil and the euro/dollar pair indicates that the ruble may also advance today. However, it is worth considering long positions on the US dollar even though the price is approaching the 73 mark. The dollar/ruble pair may still test the area of 73.05. Some experts predict that the ruble may break through this level by the end of January and strengthen to the level of 72 against the greenback. A negative background will help the US currency to regain ground. In this case, the mark of 74 rubles per dollar may again become relevant. In the near future, the dollar/ruble pair is expected to trade in the range between 73 and 75.

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