Russian stocks to rise in early trade in line with oil prices

MOSCOW, Dec 12 (PRIME) -- Russian stocks are likely to increase on Monday morning as investors will price in oil price growth, analysts said.

The Brent oil price jumped 4.247% to U.S. $56.74 per barrel as of 9.14 a.m. Moscow time, according to the ICE exchange.

“Taking into account the growth of oil futures, the condition of the external background prior to the start of the trade in Russia may be seen as favorable. We expect the market to open with a significant increase of up to 1% of the MICEX index close to 2,230. The levels of 2,210 and 2,200 will become the closest support, while the levels of 2,250 and 2,260 will act as a resistance level,” Vitaly Manzhos, a senior analyst at Bank Obrazovanie, said.

During the first minutes of the trading session, the market will price in the oil price jump following successful negotiations between OPEC and non-OPEC states, Manzhos said.

“Technical analysis shows that prolongation of the upward trend of the RTS index is possible. It is reported that Mexico may join the oil cut agreement, while Saudi Arabia is ready to slash its production even more than envisaged by the OPEC deal. Expectations of lower supply on the energy market provide grounds for growth of futures for the Brent,” investment company OLMA said in a research note.

Timur Nigmatullin, an analyst at Finam financial firm, said that the market may be under pressure of Wednesday’s meeting of the U.S. Federal Reserve System (Fed), where the authority is expected to increase the key rate. This may lead to investors fleeing “for quality” and to a corresponding contraction of emerging markets.

“Still, the Russian market cannot ignore an about 5% growth of oil prices despite risks of the upcoming Fed’s meeting…The ruble is very likely to rise about 1–1.5% against the U.S. dollar in the first hours of trade, and the domestic stock market will also react positively to the growing oil,” Nigmatullin said.

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