Moscow - The Russian rouble erased gains after an agreement with Saudi Arabia to freeze oil output fell short of expectations the world’s two largest crude producers would agree to a cut to boost prices.
Freezing output at January levels will be “adequate” and the nation still wants to meet the demand of its customers, Saudi Oil Minister Ali Al-Naimi said in Doha after talks on Tuesday with Russian Energy Minster Alexander Novak.
The rouble fell 0.3% to 77.15 per dollar at 12:24 p.m. in Moscow, reversing an advance of as much as 1.4%. Government bonds pared gains with the yield on five-year notes falling four basis points to 10.30%.
"I think the rouble, and other oil-connected markets, fell after the news because there were heightened expectations of a production cut rather than a ‘freeze’ of production levels,” said Koon Chow, a strategist at Union Bancaire Privee in London.
“I think this is an important initial step to stabilize the oil market but given the oversupply in the market we need either demand to pick up, or for non OPEC producers such as the US to actually cut production. We are not yet at this point."