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As WTI Drops Under $90, Russia Prepares For Great Financial Crisis With $60 Oil "Stress Case"

Submitted by Tyler Durden on 10/02/2014 19:27 -0400

Crude Crude Oil Market Share OPEC Reuters
The plunge in the price of crude oil in the last few months has many global-recovery-truthers questioning their assumptions. Between slowing growth expectations, US (and Libya and Iraqi Kurds and Russia) supply, and Saudi Aramco cutting prices (argued as maintaining market share but has the smell of a quid pro quo over Syria), oil prices have broken below $90 today to 17-month lows. However, for some major suppliers there is concern that more pressure is to come, as Reuters reports, Russia's central bank is working on measures to support the economy should oil prices fall by as much as a third or more, as First Deputy Governor Ksenia Yudayeva as saying the central bank was working on a "stress scenario" that was likely to envisage an oil price of $60 per barrel. Of course, as we noted previously, there is always the 'oil-head-fake' and as one analysts noted, "the main OPEC countries would experience budget difficulties long before that and would have to take action to cut supply."

There are numerous reasons for the drop in oil prices (as Ransquawk summarizes),

Overnight we saw Saudi Aramco cut official oil prices for Asian customers in November by more than expected despite oil price weakness and oversupply with traders seeing a  price-war for market share. Analysts at Commerzbank suggest that the OSP cuts gives a rise to doubt about OPEC's long-standing strategy of striving above all for price stability. [ZH: one can't help but wonder if this is some quid pro quo to the US - heading into elections, post-QE - in return for actions in Syria]

Excess supply emerging out of Libya has weighed over September, with the National-Oil-Company targeting 1mln bpd within the coming weeks.

Furthermore, OPEC have still held back from intervening either verbally or physically, signalling they are comfortable with the current fall in oil-prices. The next OPEC meeting occurs in November.

Elsewhere, Iraqi Kurds are to triple their oil output by the end of next year to 1mln bpd.

Of note, Russian supply has increased by 0.9% M/M in September and is thus providing further supply into the market.

Some analysts have also pointed out that the continuation of global growth concerns will continue to weigh on oil prices.

But, as Reuters reports, Russia is preparing for a further sharp drop in oil prices...

Russia's central bank is working on measures to support the economy should oil prices fall by as much as a third or more, a senior official said on Wednesday, showing growing concern as the rouble slides and Western sanctions take a toll.

Interfax news agency quoted First Deputy Governor Ksenia Yudayeva as saying the central bank was working on a "stress scenario" that was likely to envisage an oil price of $60 per barrel.

This would be added to three existing scenarios for the central bank's policy outlook for the next three years, and compares with a $100 assumption in the 2015-17 state budget adopted last week.

"The purpose of this scenario is to prepare a shock scenario to work out an action plan which we would implement to limit negative effects," Interfax quoted Yudayeva as telling a conference.
 
The central bank's current base scenario also assumes the oil price will recover above $100 per barrel for the next three years. Even then, it predicts only modest economic growth.

Commenting on the bank's new stress scenario, Finance Minister Anton Siluanov said that his ministry didn't plan to adjust its own projections used for budget planning, which he said factored in a possible oil price as low as $80 per barrel.

"The forecast of the central bank somewhat differs from that of the government. There is nothing terrible about the fact that they consider a wider range of possible changes in price parameters," he said.

Macro-Advisory analyst Chris Weafer said in a note that talk of emergency measures such as capital controls did not indicate any fundamental shift in policies. Such contingency planning was normal good business practice and "does not indicate that the central bank, or the Kremlin, has changed its position", he said.

Were oil to fall below $75 per barrel, the central bank could be inclined to back-track on its plans to float the rouble next year, he said, but added that this scenario was unlikely. "The main OPEC countries would experience budget difficulties long before that and would have to take action to cut supply,"he said.

Why do u need to criticise dreamhunter for his non stop postings? Let him be, thats his effort, no matter what, either this will save his investment or not... I never see in i3investor forum anybody as hardworking as him... I salute him for this, though I am one of his rivals... I hope he can make it

Talk talk talk ... hmmm ...

I thought I admited here before that I bought at 41 and sold 455.... yet surelaughdie is now claiming the same with today's poor performance..... sapa lagi boleh percaya? Him or me? Hihihi... some people like to talks big while ut's too late already...hihihi

Do wori 38...35...33...31 ... if
God permits will eventually come...saved for a week doesnt mean it has bottomed already...hihihi... today we 'll see if down jones keeps bouncing back after little correction... sometimes it must stop...hihii

Me the original... u can check all the posts...hihi

Overvalued

Will 9 cents comes? Hihihi

Hihi

Hopefully klci goes under 1800 today...hihi

Coming coming

Today deep deep correction...hihihi

Die die die dow jones fell by 264 points... hihihi

Tomorrow might be a very dark red meat coming

Now dow jones down by 240 points...hihihi

Poyo?

Fam jenny u were implying musang foxking with a dash... while me are the one with dash... the clone one without a dash is the one who keeps giving negative statement

Komnas... bijak

Agree

Today everyone is happy ..the protectors are happy, the attackers happy, halim happy, sellers happy, buyers happy, protagonists and antagonists all are happy...even me are happy today... hihihi

Hihi ;)

Green back

Red meat coming back 0.435...nyum nyum

Berapa best price to buy?

Parking now at 0.40

Sold 45.5... hihi

Hihihi

Excellent call sang jero... for today...and next 1,2,3,4,5 weeks (not for yesterday and days before).... hehehe

Hihi wa mau belikah mau pujikah mau critic kah...wa punya sukalah..hehe... ini sumatec bukan lu and gang punya punya...wa peduli apa... whatever!

Wrong for 3 weeks actually

No need to follow looiks...he has been wrong for 2 weeks... buying at higher price everyday plus some contra loss... buy buy buy ... alamak masa 5pm da abis... sapa tak beli memang menyesal

Sumatec is very hot today... tomorrow will be hotter... buy buy buy... target price...80 cents AT LEAST within JUST 2 WEEKS... beli beli..sapa tak beli memang rugi.. ;)

Post removed.Why?

Luckily bought sumatec 41 cents today... bye bye glotec.... hehehe

41 cents was a good price for me...follow sang jero diam2...hehehe

Dont buy... be patient... 34 cents coming... will regret if buy now

Jangan gaduh... sell now ... buy back at 34 cents... increase your volume.... reduce your risk.. then wait for your increasing profit

Discount 6.5 cents today

Today mega sales... 34 cents... discount 6.5 cents

Average volume now only 85m from more than 200m daily.... buy when average volume hits under 2m shares

Today mega sales... 34 cents... discount 6.5 cents

A man that still loves his finger lor... bye

Spike below then closing above 40cents... masih belum potong jari?

nanti kalau sudah close below.... dia cakap... besok boleh naik balik above 40 cents?

ini macam punya bet susah lor... nanti delisted pun u garenti tak mau potong jari jugak... haha ..tipu punya olang

Hangtuah memang pandai punya org... otak tajam... ok bye... duit duit duit... wa mau kira duit... hehe...bye

Mana ada tipu... nanti wa beli balik... timing baik punya... tp 50 cents at least guaranteed. ...hihi gua kasi garenti lagi satu kali... timing mesti baik... tak baik... pun tak apa... masih boleh untung...

glotec ngam ngam soi !!! Menuju ke langit... tapi kasi gua beli murah dulu ye...hehehe ... tatak tipu punya kaunter.... mau main... cara mesti pandai ... kolam sama... ikan byk... joran lain... skil lain... hasil tak sama... tapi kalau sabar... guaranteed 50 cents.. guaranteed ... at least ... then menuju ke langit... kikiki

Kalau bawah 40 sen... itu sudah lain deal... lu kena potong lidah... deal? Hihi

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Notes.... BAWAH ... does not have same meaning as ... CLOSE...

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Agreement mesti ada precaution clause sama ini loyar pusing...kiki... bye bye to your finger and tounge... ada berani...haha

Posted by Victor Valdez > Sep 5, 2014 09:25 AM | Report Abuse  

berangan 0.40 cents ????..kah..kah..kah..still dreaming 0.40 cents? kah..kah..kah..Gua potong jari dapat .40 cents ..kah..kah..kah  

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Notes... DAPAT = CLOSE

kikiki

Victor the liar DICTIONARY... states that

DAPAT = CLOSE

kahkahkah.... itu upsr tamil leak question punya jawapankah? Hihihi