The Russian economy (catch all)

[OUTLAW 09]

As usual with stuff flying around on Twitter, this is suspect: there's no indicated source for the data and no actual transactions cited. The figures would represent a very large deviation from the normal Brent/Urals price spread, and that alone makes them questionable.

When you see a referemce to a specific transaction: i.e. a Urals cargo in the Baltic or Mediterranean sold on x day at dated Brent minus y... then you know the actual price, what people are paying instead of what someone says they are paying. I would not trust such information via Twitter, unless linked to a credible source.



The US was never a significant buyer of Russian oil; domestic production is primarily displacing Venezuelan and Nigerian production. That oil will go somewhere of course, and will compete with Russian oil for buyers.



The Saudis have cut 400k bbl/day. It's not clear how far they are willing to go. So far OPEC seems to be treating it as normal fluctuation, no special meetings to discuss production cuts or any similar indications of alarm.



Which Swedes? Again, don't take it seriously unless specific transaction data is reported.



Yes, it is, though the extent of the problem remains difficult to quantify. That still leaves the question of how any of this relates to the Ukraine. I don't see Putin backing down just because he suddenly has an unanticipated money problem: it might even make him more aggressive. It's not as if backing down in the Ukraine will push oil prices back up again. The oil price problem and the woeful state of the Russian oil industry will be there no matter what happens in the Ukraine, so it's hard to see it as a major influence on the decision making process there.

Dayuhan--there you go again---what will it take for you to "actually see" 1) the price is falling and 2) the reasons why.

Right now in the Us a simple fact---a majority of all refineries are and were built to take source crude--why the pricing was cheaper and the US would then import from wherever the price was the cheapest--now with rather large amounts of US crude online and more coming the US refineries hast shifted away from imports to using inland sources---thus less of a demand from wherever the sources were.

You still have not convinced me that in fact the ME has lowered their production numbers which in fact with a lower US demand creates an over abundance thus ever lowering prices.

Lastly even official Russian sources indicating panic on their lowering cash inflows from sales actually match the net comments regardless of what you think about net comments and lack of validation support.

You do realize that 80% of all intelligence is open source and that often demands no validation process--it is there for all to see and analyze.

[OUTLAW 09]

Sechin expecting 1,5 trillion RB from Russia's Wealth Fund & Pension Fund

Here it comes:Russian Min. of Finance says Rosneft likely to get bailed out by State Wealth Fund http://www.newsru.com/finance/13sep2014/siluanov.html … via @LevShlosberg

[Dayuhan]

Dayuhan--there you go again---what will it take for you to "actually see" 1) the price is falling and 2) the reasons why.

We all see that the price has fallen. Whether this is in the range of normal fluctuation or the start of an extended decline remains to be seen. I certainly wouldn't assume either, there are many variables involved and many of them are not amenable to reliable prediction.

Right now in the Us a simple fact---a majority of all refineries are and were built to take source crude--why the pricing was cheaper and the US would then import from wherever the price was the cheapest--now with rather large amounts of US crude online and more coming the US refineries hast shifted away from imports to using inland sources---thus less of a demand from wherever the sources were.

Increased US production is certainly a factor. Whether it is sufficient in the medium to long term to compensate for decreasing production and potential political events elsewhere remains to be seen. Again, the price drop is in no way specific to "sour crude", it's across the board, and the oil displaced by US production is by no means all sour: the single biggest drop in US imports is the 73% decline in shipments of light, sweet Nigerian crude. What the Russians are exporting is only mildly on the sour side and is not especially heavy and would require no major modifications to refine: unlike Venezuelan, it poses no special technical challenges to transport or refine.

You still have not convinced me that in fact the ME has lowered their production numbers which in fact with a lower US demand creates an over abundance thus ever lowering prices.

The Saudi production cuts are established and on record, that's not under dispute. I would not expect OPEC as a whole to address the issue before their scheduled Nov meeting unless the price drops under $90.

The "ever lowering prices" expectation is not shared by most credible analysts, though it may fly around Twitter.

Lastly even official Russian sources indicating panic on their lowering cash inflows from sales actually match the net comments regardless of what you think about net comments and lack of validation support.

If you cherrypick the panic comments (social media and cherrypicking go together rather well, that's the impression you get. The price will have to stay under $100 for some time to drop the annual average to a seriously critical level. That may or may not happen: again, there will be a substantial acceleration in buying in Oct and Nov as the NE Asian consumers get their winter contracts in. Certainly a sustained period below $100 would put a lot of stress on the Russian economy, but I don't see credible analysts expecting that, so it remains largely a speculative possibility.

You do realize that 80% of all intelligence is open source and that often demands no validation process--it is there for all to see and analyze.

"Open source" encompasses a fairly wide range, no? If you believe what you read on Twitter, you'll never want for moonshine.

Again, though, what you're not addressing is the point that there's little reason why any of these oil issues would cause Putin to revise his policy in the Ukraine. If anything, these problems may make Russia even more aggressive. The decision to back down or push ahead in the Ukraine will have no impact on the oil price problem, which will be there no matter what happens in the Ukraine. A transient drop in oil prices will cause pain, but it will be manageable pain. An extended drop... who knows where that would go, but it's far from certain to happen.

[OUTLAW 09]

Dayuhan---And sanctions do not work? By the way this is taken Dayuhan from social media---have you seen anything reported by the standard media yet on the items mentioned below--that is the power and speed of social media.

Siluanov's comments imply that any financial assistance to Rosneft & Novatek is likely to be a fraction of the amount requested by Rosneft and this does not include the six banks hit who are also asking for financial support to survive through to the end of 2014--and sanctions are not working?--then the sinking income from oil/gas and where does it then stop financially for the Russian CB?

NOTE: Rosneft must pay back at the end of 2014 almost 46B in credit lines and long term bank loans/bonds.

Russian companies have been playing the great Ponzi scheme of where is the pea by taking out large western bank loans on virtually no interest charges in order to hold onto their own capital--normal for businesses, but now for some reason those billions they are suppose to have had in their bank accounts seem to not be there---wonder what personal bank account in the UK or Switzerland they are sitting in?

Siluanov: Russia is ready to support sanctions-hit energy companies #Rosneft & #Novatek from its National Wealth Fund
http://www.reuters.com/article/2014/...0RE0B420140913 …

NOTE: There is talk of over 70% of the National Wealth Fund being given to Rosneft--so much for future Russian pension raises. But then this comment late yesterday.

Siliuanov: "It's been decided so far not to unseal the remaining 40% [of NWF]. This is our strategic reserve"
http://rbth.com/news/2014/09/13/rosn...4_-_39756.html …

[Dayuhan]

Dayuhan---And sanctions do not work?

They work if they accomplish their goal... have they? Only if the Russians back away in the Ukraine, and that doesn't seem to be happening.

By the way this is taken Dayuhan from social media---have you seen anything reported by the standard media yet on the items mentioned below--that is the power and speed of social media.

Rumors always spread fast. They don't always turn out to be true.

Siluanov's comments imply that any financial assistance to Rosneft & Novatek is likely to be a fraction of the amount requested by Rosneft and this does not include the six banks hit who are also asking for financial support to survive through to the end of 2014--and sanctions are not working?--then the sinking income from oil/gas and where does it then stop financially for the Russian CB?

Again, sanctions have only "worked" if they change Russian policy on the Ukraine, which is what they were intended to do.

Hard to know when, or if, it stops. If oil prices bounce back they can probably get through it pretty much intact. They still have all sorts of problems to deal with, but those aren't caused by sanctions and their impact on the geostrategic equation is not predictable. It is by no means certain that financial stress at home will make Russia less aggressive toward its neighbors.

[OUTLAW 09]

Dayuhan--since you do not like comments from social media---then is an official one from the RIA---from the horses mouth but take it with a grain of salt for the following reason--remember I mentioned the Ponzi scheme ie where is the pea under the walnut shell game---there have been some serious Russian economists commenting on the oil price and they indicated a base of 114 was the correct calculating price for the Russian budget purposes up from this figure of 96 and not what was mentioned four weeks ago at a base price of 104.

During the beginning of the Crimea event Russia mentioned a base of 95 was needed now this number below.

The Russians are literally playing with the numbers---why---it is an old Cold War game of not letting the opposition know the real numbers so they cannot accurately gauge my economy--only I have the keys to the kingdom kind of thing going on.

MOSCOW, September 14 (RIA Novosti) - Russian Ministry of Finance closely follows the oil prices and will undertake measures in case the price for Urals oil falls significantly lower than the budgeted figures of $96 per barrel, Russian Finance Minister Anton Siluanov told journalists on Sunday.

"We will monitor the situation and react according to the situation," Siluanov promised, adding that the current decline of oil prices was caused by growth in Libyan oil production and beginning of export of the light crude oil from US.

"How will the situation unfold? Either the [global] economic growth will have to increase, causing the increase in demand for oil, or, if measures to regulate the oil market are once again not taken, there will be an excessive supply," said the Minister.

Dayuhan--this single comment from Siluanov is signaling a clear understanding that the Russian reality is sinking in as the world markets are in overabundance right now and for the coming year or so and he is right it is the US oil coming online---Libyan oil is a smokescreen and they never produced that much even in good years.

[OUTLAW 09]

Dayuhan---a really good research done on how exactly the Russian oil/gas wealth is really just a Ponzi scheme.

With so much being ripped off how can the public numbers be anywhere close to accurate?

http://johnhelmer.net/?p=11324

And this dude has his wealth in the US and he is not being hit by the sanctions?

[OUTLAW 09]

Seems the Russia economy is having some problems these days.

From Interfax today:

16:10

DUE TO CHANGES IN MACROECONOMIC PARAMETERS RUSSIAN BUDGET WILL NOT RECEIVE 570 BILLION RUBLES IN 2015-2017 - SILUANOV

16:09

NEW BUDGET EXPENSES IN 2015 ESTIMATED AT 500 BILLION RUBLES, WILL BE FINANCED THROUGH REDISTRIBUTION - SILUANOV

16:08

FINANCE MINISTRY PLANS 2015 BUDGET WITH DEFICIT AMOUNTING TO 0.5%OF GDP - SILUANOV

16:06

RUSSIA MAY START USING RESERVE FUND ONLY IN CASE OF SHARP OIL PRICE FALL - SILUANOV

16:06

RUSSIA'S RESERVE FUND WILL NOT BE REPLENISHED IN 2013 AND WILL HARDLY BE REPLENISHED IN 2015 - SILUANOV

16:04

RUSSIA'S 2014 BUDGET MAY BE CARRIED OUT WITHOUT DEFICIT - SILUANOV

[OUTLAW 09]

Long RIA press release today on Russian oil and gas numbers.

NOTICE: The Russian constantly refer to increased Libyan oil production and that does not quite fit reality.
Libyan Oil Production Hits Highest Level in Five Months from July 2014
Output Still Less Than Half of Normal Production Level

Yes their oil production is up faster than anticipated---BUT it is still half of the original production before the fighting.
It still does answer the major low demand and oversupply in the current sour crude markets.


Updated 7:52 p.m. Moscow Time

MOSCOW, September 14 (RIA Novosti) - Exports of natural gas from Russia are expected to grow while crude sales are most likely to go down as a result of a revival in Libyan oil production, and the start of light crude exports from the United States, according to the data provided by Russia's Ministry of Economic Development.

Exports of natural gas from Russia will amount to 190 billion cubic meters in 2015, 191 billion cubic meters in 2016, and 191.5 billion cubic meters in 2017, an evaluation of basic macroeconomic indicators from the Ministry of Economic Development shows. The evaluation was provided by the Ministry to RIA Novosti on Sunday.

Forecasts of natural gas exports compared with the budget for 2014-2016, in addition to index budget projections for 2017, have slightly changed. Thus, the rate for 2015 increased by 0.9 percent, the 2016 rate went up by 0.4 percent, while the 2017 rate decreased by 0.3 percent.

In comparison with the forecast published by the Ministry in May, the rate of gas exports from Russia in 2015 decreased by 1.2 percent and by 0.8 percent in 2016 and 2017.

According to Russia's Federal State Unitary Enterprise, Central Dispatching Department of Fuel Energy Complex (CDU TEK) gas exports in 2013 increased by 10 percent totaling some 204 billion cubic meters.

Meanwhile, oil exported from Russia in 2015 and 2016 will amount to 227.5 million tons and 229.5 million tons in 2017; with 153.5 million tons of oil in 2015, 149 million tons in 2016, and 144.2 million tons in 2017.

The Ministry downgraded the outlook for oil exports in 2014 and 2015 by 4.3 percent and 6.2 percent respectively, compared with the budget for 2014-16. Forecasts for 2017 oil exports predict a 8.2 percent decrease compared with respect to budget projections.

In comparison with the forecast published by the Ministry in May, Russia's oil exports have been cut by 0.96 percent in 2015-16 and by 0.2 percent in 2017.

Exports of petroleum products from Russia in 2015 are predicted to total 153.5 million tons along with 149 million tons in 2016, and 144.2 million tons in 2017. Forecasts have increased by 13.9 percent and 15.4 percent with respect to budget figures for 2015 and 2016 while budget projections for 2017 have increased by 16.2 percent.

The Ministry's May projections on petroleum exports from Russia have increased by 3.4 percent in 2015, 2.8 percent in 2016, and 1.4 percent in 2017.

According to the CDU TEK, oil exports decreased by 2.1 percent in 2013, amounting to 234.86 million tons.

Russian Finance Minister Anton Siluanov told journalists on Sunday the Finance Ministry was closely following oil prices and pledged to take measures in case the price for Urals oil fell significantly lower than the budgeted figures of $96 per barrel.

"We will monitor the situation and react according to the situation," Siluanov promised, adding that the current decline of oil prices was caused by growth in Libyan oil production and beginning of export of the light crude oil from the United States.

"How will the situation unfold? Either the [global] economic growth will increase, causing the increase in demand for oil, or, if measures to regulate the oil market are once again not taken, there will be an excessive supply," said the Minister.

[Dayuhan]

Dayuhan--since you do not like comments from social media---then is an official one from the RIA---from the horses mouth but take it with a grain of salt for the following reason--remember I mentioned the Ponzi scheme ie where is the pea under the walnut shell game---there have been some serious Russian economists commenting on the oil price and they indicated a base of 114 was the correct calculating price for the Russian budget purposes up from this figure of 96 and not what was mentioned four weeks ago at a base price of 104.

Anything from official Russian sources has to be taken with multiple grains of salt.

Given the opacity of Russian budget processes, we have no way of knowing what prices they are assuming when they budget. If they are assuming $114, then they are essentially assuming a deficit, because that's way out of line with even the highest estimates. They may very well be doing that: governments routinely run deficits: it's a problem, not a catastrophe, and they can carry it off for a while if they juggle (as most governments do).

"We will monitor the situation and react according to the situation," Siluanov promised, adding that the current decline of oil prices was caused by growth in Libyan oil production and beginning of export of the light crude oil from US.

That's completely off the wall: the US does not export oil. It's illegal to export oil from the US. There's some talk of changing that, but it's still talk at this point.

An unexpected increase in Libyan exports has had an impact on the overall prices, as has greater confidence that Iraqi production will not be heavily affected by the mess there. Relatively small fluctuations in production, even in the hundred thousand bbl range, can have a significant impact on prices.

Analyst consensus still seems to be that the 2014 average will be over $100, and last I looked the 2015 projection was hanging around $105. If they can't balance at that price they'll be in deficit. Will that have any impact on their policies in the Ukraine?

Again, we all know that Russia is corrupt, we all know they have serious problems in their energy industry, we all know that sooner or later this will all catch up and they will have to cope with serious fiscal issues. The question is how any of this will impact their foreign policies. I wouldn't expect much to change: if anything they may get more aggressive. Of course in the long term the possibility of another economic collapse is always there, but that's well out in the future.

[OUTLAW 09]

Anything from official Russian sources has to be taken with multiple grains of salt.

Given the opacity of Russian budget processes, we have no way of knowing what prices they are assuming when they budget. If they are assuming $114, then they are essentially assuming a deficit, because that's way out of line with even the highest estimates. They may very well be doing that: governments routinely run deficits: it's a problem, not a catastrophe, and they can carry it off for a while if they juggle (as most governments do).



That's completely off the wall: the US does not export oil. It's illegal to export oil from the US. There's some talk of changing that, but it's still talk at this point.

An unexpected increase in Libyan exports has had an impact on the overall prices, as has greater confidence that Iraqi production will not be heavily affected by the mess there. Relatively small fluctuations in production, even in the hundred thousand bbl range, can have a significant impact on prices.

Analyst consensus still seems to be that the 2014 average will be over $100, and last I looked the 2015 projection was hanging around $105. If they can't balance at that price they'll be in deficit. Will that have any impact on their policies in the Ukraine?

Again, we all know that Russia is corrupt, we all know they have serious problems in their energy industry, we all know that sooner or later this will all catch up and they will have to cope with serious fiscal issues. The question is how any of this will impact their foreign policies. I wouldn't expect much to change: if anything they may get more aggressive. Of course in the long term the possibility of another economic collapse is always there, but that's well out in the future.

So Dayuhan--now that you have seen "official" Russian oil/gas statements and noticed they tended to be out of touch with "reality" then is really Russia one large supper Ponzi scheme just teetering?

Russia oil broke to 94.85 today and heading lower.

https://twitter.com/andersostlund/st...925120/photo/1

[OUTLAW 09]

So Dayuhan--now that you have seen "official" Russian oil/gas statements and noticed they tended to be out of touch with "reality" then is really Russia one large supper Ponzi scheme just teetering?

Russia oil broke to 94.85 today and heading lower.

https://twitter.com/andersostlund/st...925120/photo/1

Dayuhan---by the way a side question--was the press release for internal Russian consumption and or external global consummation?