Russia C-Bank Has Oil at $35 Scenario

"The Bank of Russia in its risky scenario assumes that the average Urals oil price will be at the level of $35 per barrel next year, the central bank’s report on monetary policy revealed on Saturday. "Under the risky scenario, the oil price is projected to fall to $35 per barrel in 2019 and remain at this level later, making it impossible for the energy resources exporter countries to keep the agreements on cutting the output," the report said."

And here's why it could happen:

"This may be linked to a range of unfavorable events, which may take place in any combination. Among them is the significant expansion of foreign trade restrictions, the deterioration of macroeconomic situation in the countries with developing markets and the rise in capital outflow from there, as well as the risks that international sanctions against Russia will further expand."

It pays to be prepared, I like to say.

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Russia is already playing this conservatively.

● In 2016, Russia budgeted for $50 oil. 

● Russia budgeted for $40 oil for 3 years, from 2017 to 2019. 

● Now Russia is preparing for $35 oil in 2019.

Pretty sure most of you already know I'm *hoping* for $65 oil this year and *hoping* for $70 oil in 2019.  Those are not predictions or forecasts, that's what I see as a suitable balance between global oil producers and global oil consumers.

Pay attention to Russia on long term oil price futures.  They seem to be more pragmatic and geopolitically aware about oil prices than many other oil producing countries.

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40 minutes ago, Tom Kirkman said:

Russia is already playing this conservatively.

● In 2016, Russia budgeted for $50 oil. 

● Russia budgeted for $40 oil for 3 years, from 2017 to 2019. 

● Now Russia is preparing for $35 oil in 2019.

Pretty sure most of you already know I'm *hoping* for $65 oil this year and *hoping* for $70 oil in 2019.  Those are not predictions or forecasts, that's what I see as a suitable balance between global oil producers and global oil consumers.

Pay attention to Russia on long term oil price futures.  They seem to be more pragmatic and geopolitically aware about oil prices than many other oil producing countries.

Absolutely agree.

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6 hours ago, Dan Warnick said:

Absolutely agree.

Totally agree. Russia plays it cool now.. It knows it is facing turbulent times now and with the U.S. now outpacing it in overall oil production the market will be drowned in oil which would push prices down in the long term.. 

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(edited)

Russia is very conservative. After  8 month of this year they have a budget surplus about  3 % of gdp. Break even is between 55 to 65 $.

http://tass.com/economy/1016971

Quote

 

MAGADAN, August 12. /TASS/. Russia’s finance ministry expects a budget surplus of 1.5 to two percent of GDP in 2018 instead of previously forecasted deficit, Russian First Deputy Prime Minister and Minister of Finance Anton Siluanov said on Sunday.

"The budget surplus is growing. I would like to say that instead of the previously forecasted budget deficit of 1.5% of GDP, as was fixed in the law, we expect a budget surplus of 1.5-2% of GDP," he said in an interview with the Voskresny Vecher weekly news roundup on the Rossiya-1 television channel.

"This year, we anticipate a 1.8-2% GDP growth," he said, adding that the second quarter of 2018 demonstrated economic growth dynamics of 1.8%, with upwards dynamics to be further growing in the following years.

 

1,9 % after final estimation 

 

GDP growth after industry improvement = final results in autumn

2013 1,8 %

2014 0,7

2015 minus 2,5

2016 about 0 from minus 0,2 (after some industrial production growth correction)

2017 about 2 % (after industrial production growth correction to 2,1 % from 1% in spring 2018)

2018 about 2 %

2019 about 1,5 %

2018 about 2 %

2 good site in russian

https://1prime.ru

http://www.finmarket.ru

But to be honest I dont really believe in oil prices below 60  $ long term. 60 to 80 is probably sweet spot for oil. More than 80 $ damage potential demand and promotes growth of renewable energy,  less than 60 $ badly needed investment and supply.

Edited by Tomasz

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When Russia refers to oil, what product, Brent or what?

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3 hours ago, Tomasz said:

But to be honest I dont really believe in oil prices below 60  $ long term. 60 to 80 is probably sweet spot for oil. More than 80 $ damage potential demand and promotes growth of renewable energy,  less than 60 $ badly needed investment and supply.

^ yes

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12 hours ago, Tom Kirkman said:

Russia is already playing this conservatively.

● In 2016, Russia budgeted for $50 oil. 

● Russia budgeted for $40 oil for 3 years, from 2017 to 2019. 

● Now Russia is preparing for $35 oil in 2019.

Pretty sure most of you already know I'm *hoping* for $65 oil this year and *hoping* for $70 oil in 2019.  Those are not predictions or forecasts, that's what I see as a suitable balance between global oil producers and global oil consumers.

Pay attention to Russia on long term oil price futures.  They seem to be more pragmatic and geopolitically aware about oil prices than many other oil producing countries.

Mr. Kirkman, in Canada we're hoping that the Russian is correct about the $35 bbl/oil. It'd be a big raise compared to what we're getting now.

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15 minutes ago, Danny Hangartner said:

Mr. Kirkman, in Canada we're hoping that the Russian is correct about the $35 bbl/oil. It'd be a big raise compared to what we're getting now.

Danny, that's funny and sad at the same time.

If you could do something about controlling the Canadian keep oil in the ground crowd and also the oil pipelines are devil's spawn hysterical mobs, maybe the Canadian O&G industry could recover.

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18 hours ago, Tom Kirkman said:

Danny, that's funny and sad at the same time.

If you could do something about controlling the Canadian keep oil in the ground crowd and also the oil pipelines are devil's spawn hysterical mobs, maybe the Canadian O&G industry could recover.

My prediction is that the Alberta industry will have to invest in its own on-site refining capacity.  I don't get the impression that new pipe is getting built, and the rail companies do not seem to be laying additional track, so oil-by-rail through Canada is constrained.  The Rockies are a difficult challenge for Westward movement, and the Northern Shield over and around Lakes Superior and Huron are a serious obstacle to new rail and pipe in that direction.   

It could be possible to connect to rail lying just South in the USA, specifically in North Dakota via Saskatchewan and Manitoba, but then, to get to Canadian refineries, that oil would have to pass through Chicago and back in at Detroit.  Easily 50% of American rail transport passes through Chicago, as that is the historical terminus of so many US railroads.  The result is that Chicago is now a huge mess, massively congested, and made worse by the large number of commuter rail trains that flow in and out of the City.  Trains get stalled there.  So OBR is looking unattractive. 

Products refined out West will at least be consumed out West, eliminating two transit moves.  Crude out; refined in. 

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