Russia: Trade data show incipient signs of improvement, Urals oil price continues to rally
June 1, 2016
Russia’s trade balance incurred a surplus of USD 9.1 billion in April, which was slightly higher than the USD 7.7 billion recorded in the previous month. In fact, April’s reading marked a third consecutive improvement after the trade surplus shrank to an over-six-year low in January. In year-on-year terms, however, the trade surplus remained well below the USD 14.5 billion registered in April 2015. Still, the small surplus in April prompted the 12-month rolling surplus to decrease to USD 120 billion, which is the smallest accumulated surplus registered since January 2010.
April’s slightly-wider surplus reflected a slower contraction in merchandise exports. Russian shipments abroad recorded USD 23.7 billion, which represented a 22.8% annual contraction in April (March: -30.1% year-on-year). The drop is the slowest since February 2015. On the other side of the balance, imports totaled USD 14.6 billion in April, which marked a 9.5% decrease over the same month last year and the slowest decrease since September 2014.
Following a sharp plunge in February this year, global oil prices rebounded and began to rise gradually since then. In April, prices rose to just above USD 40 per barrel and continued to trade with a stronger tone in the past weeks, despite the fruitless negotiations among the world’s major oil producers in Doha on 17 April. The sustained, albeit weak increase in oil prices reflects the slow rebalancing process in the crude oil markets, which has been exacerbated by a large volume of unplanned outages now spanning the globe. Among these output disruptions are reduction in Iraqi output amidst power outages, pipeline sabotages in Colombia, wildfires in Canada, a strike in Argentina that has reduced YPF’s output by 40%, and a continued fall in Nigerian supplies as the Avengers continue their attacks. These developments are positive for Russia. The price for Ural oil continue to rally and in the last trading day of May the prices closed at USD 47.7 per barrel, which was 7.6% higher than at the end of April. Nonetheless, prices have not recovered yet, as they are 23.5% below in annual terms.
Author: Ricardo Aceves, Senior Economist