Saturday, February 26, 2022

Friday's Russian Financial and Economic News

I spent some time on our Bloomberg terminal around lunchtime on Friday, but then got tied up in other things, so this news is 24 hours late. 

The price of those Russian CDS's went up to 917 on Thursday evening, but they were back in the 500's by Friday. Either way, it's several time what they were just the other day. For comparison, CDS's for Canada's debt were at about 16 before the truck protests, and peaked out at just under 23 last week.

The exchange rate seems to have stabilized, and was at 83 to the dollar when I looked. 

The oil prices that I quoted on Thursday were all I could get from publicly available stuff at home (and the main reason I went to use the Bloomberg terminal). I had quoted a price for ESPO, which is oil delivered by pipeline (and I think, mostly to China). It was up to 102, which is actually good for Russia. The thing is with a pipeline, is that it can be shut off at either end, but if it's flowing the price will broadly match what's available elsewhere. 

Tankers, on the other hand, have to cruise into a (broadly defined) war zone, and be insured for that. For that sort of thing, you want to look for bids and asks, and you really need the Bloomberg terminal for that. Crude oil comes in many different varieties and qualities, but prices tend to follow two standards that are available in high volumes: WTI and Brent (West Texas Intermediate, and Brent which is from the UK side of the North Sea). Prices of other forms of crude oil are sometimes shown by the barrel, and sometimes by the discount from WTI or Brent. Here's the thing: Russian crude to be loaded on tankers in about a week was being offered at an $11.60/barrel discount, and there were zero buyers. Russian crude that was already on tankers was not being bought readily, but when the asks got low enough it was being snapped up by refiners in India. Not surprisingly, India, which has rotated onto the UN security council abstained from voting to condemn Russia (along with China, and the UAE).

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