Russian stocks can drop on strong oil price correction

MOSCOW, Mar 19 (PRIME) -- The Russian stock market may slump at opening on Friday on the back of a strong downward correction of oil prices, analysts said.

"The fall of oil price is obviously negative for the Russian stock market. Not only from the point of view of oil sector quotations. Non-residents who look at Russia through the prism of oil can start to take profit from ruble stocks in the current conditions," Alor Broker senior analyst Alexei Antonov said.

He said that the oil price correction was about to happen but was not expected to be so strong. The unusually bitter cold in the U.S., which used to support oil prices, has subsided. Oil will possibly try to recover on Friday but a further decline was very likely.

The U.S. stock market futures, the U.S. dollar and oil were neutral in the morning, but still, the MOEX Russia Index may fall by 1% or more at the session start, Antonov said.

Vitaly Manzhos, senior risk manager at investment company Algo Capital, said that the sanctions risks for the Russian market have become more prominent amid polemic between the leaders of the U.S. and Russia late on Thursday. Later that day, the U.S. started considering sanctions against the operator of Russian gas pipeline project Nord Stream 2. 

Even statements not followed by measures are strongly negative for the Russian market, he said.

According to Manzhos, no important statistics reports will be released during the day, and the Russian market will be guided by opening of the U.S. market.

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