20.07.2020: RUB to trade in 71-74 range against USD (Brent, USD/RUB)

The week started with moderate sales, which may intensify during the week. The negative dynamics of the energy market dragged the nearest Brent crude futures contract below $43 per barrel once again. The ruble is trading downwards due to falling oil prices and local factors.
The rate of growth in new coronavirus infections in the world is accelerating, 30% of all COVID-19 cases are in the United States. As of Friday morning, the US accounted for the world's highest number of infections. With more than 77,000 new COVID-19 cases, the US broke the record for the number of confirmed infections registered in a single day. This is twice as many as in April. Investors are worried that the current situation may force the US authorities to tighten quarantine measures in the hardest-hit states. Business activity and, accordingly, the US economy will come under pressure, which will affect risk appetite. Besides, the ongoing tensions between the United States and China may lead to a decline in trading activity.
The adjusted OPEC+ deal is set to come into force in August. Global energy supply is expected to recover partially, which will exacerbate the existing problem of the supply glut. The world demand for crude oil is on a stable but slow recovery path due to the reimposed lockdown in the United States. This is a barrier to growth in oil prices. This week, Brent is likely to trade in the range of $38-42 per barrel.
At mid-day, the North Sea crude futures contract expiring in September was trading at 42 dollars 73 cents per barrel. Brent lost more than 1%. The nearest WTI crude oil futures contract dropped by 0.7% in price. Nevertheless, market players are still holding US crude above the level of $40 a barrel.
The quotes of oil benchmarks changed little from the previous week. Brent was down by 0.2%, while WTI gained 0.1%.
The dollar/ruble pair came close to the level of 72.00. This week, the ruble is expected to fluctuate in the range of 71.00–74.00 per US dollar. The global pandemic exerts pressure on the currency.
An active phase of the July tax period may act as support for the Russian ruble. In addition, a trend change in the energy market is likely to increase trading activity. If Brent rises to $45 a barrel amid investors' hopes for the global economic recovery and buoyant demand for oil, the ruble may gain ground. In the meantime, the OPEC+ measures help oil quotes to stay above $40. This means that the Russian currency will be able to continue to trade within the current range.
As for today's session, the worsened investor sentiment in external markets is expected to push the dollar/ruble pair to the middle of the 71.00–74.00 range. The mixed movement of developing country currencies may force the ruble to move sideways below 72 per dollar.
This week, the ruble traders are awaiting the meeting of the Bank of Russia. On Friday, the regulator is anticipated to lower its interest rate by 25 basis points. In general, the cycle of rate cuts in Russia is coming to an end.

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