Ruble set for best streak since January on oil meeting optimism

Bloomberg

Russia’s ruble advanced for a fourth day, the longest winning streak in almost three months, as investors turned their attention to a weekend meeting between oil producers that’s driving up the price of crude on speculation suppliers may freeze output.
The currency strengthened 0.4 percent to 65.486 against the dollar in Moscow, bringing the gain over the past four days to 3.9 percent. Brent crude is trading above $44 a barrel following a 4.3 percent rally on Tuesday that was spurred by an Interfax report suggesting that Saudi Arabia and Russia had reached a consensus on whether to freeze production.
The ruble is the second-best performer among emerging-market peers this year as the rebound in Russia’s main export earner encouraged investors including Pacific Investment Management Co. to buy the currency. Crude and natural gas account for almost half Russia’s budget revenue and traders are waiting for any signs that oil-producing nations will freeze supplies at meetings in Doha on Sunday.
“We could witness a classic ‘buy the rumor, sell the fact’ reaction if the meeting in Doha indeed ends with some agreement between major oil producers,” said Piotr Matys, a currencies strategist at Rabobank. “Oil prices could fall on the back of profit taking as the rally is starting to look somewhat stretched, which in turn would prevent further retracement in the ruble-dollar.”

Downside Risks
Matys said he’s concerned the oil rally has gone too far and the ruble’s potential for further gains is limited. Sberbank CIB analysts said Brent could fall to $35 a barrel or lower should the Doha talks fail, which would drive the ruble toward 75. The ruble should trade at 65 with Brent at $45 per barrel.