Collapse in Oil Prices Cause Record Ruble Fall

MOSCOW, November 28 (Sputnik) –  Collapsing oil prices have prompted the ruble to drop to a record low on Friday of almost 50 to the dollar, while the currencies of other oil-producing nations also plummeted.

According to data from Bloomberg, at Friday’s open, the dollar was priced at 49.18 rubles, and rose a further 1.99% on Friday morning to 49.55. Given its current trend, the ruble is heading for its biggest monthly loss since 2009, on the back of falling oil prices.

HSBC strategist Murat Toprak told Reuters, "The ruble has overshot — but if the oil price keeps going lower like that, this momentum may continue."

According to data from Bloomberg, the price of Brent crude made a small gain of 0.12% on Friday morning to $72.57 per barrel, while WTI fell further to $68.92 per a barrel, a drop of 6.47%. Bloomberg also reported that its Commodity Index of 22 raw materials has dropped 2.11% so far today to 115.00, its lowest level since July 2009.

The falls are driven by the announcement on Thursday by the OPEC cartel that they would not cut their oil output in order to support prices. “Given the supply capacity now outside OPEC, cutting production at these levels wasn’t in the best interest of the Saudis or OPEC,” Ric Spooner, a chief strategist at CMC Markets in Sydney, told Bloomberg. “In the medium term, somewhere in the $60s is likely to see a base, but you couldn’t discount the possibility of a short-term spike down to even lower prices.”

"Welcome to the new world of oil," Michael Wittner, senior oil analyst at French bank Societe Generale, told Reuters, remarking that the trend toward low prices was set to last in the long term. "Saudi Arabia and OPEC will no longer be the mechanism to balance the market, they have relinquished that role."

Other oil producers suffering from a drop in their currency included Nigeria, Angola and Malaysia.  Norway, Western Europe’s largest crude oil producer, saw its krone drop as much as 1.7% against the dollar to 6.94.  The dollar was buoyant in the face of currency weakness from oil-producing countries, with Bloomberg’s Dollar Spot Index headed towards its highest close since March 2009.