RusEnergy

03.23.2005 RBC News - The government's budget planning commission has deemed it expedient to increase the oil price estimate for 2005 to $39 per barrel, a government representative has told reporters after the commission's meeting, where economic development and trade minister German Gref announced the updated medium-term scenarios of Russia's social and economic development. The necessity of raising the oil price estimate is related to the situation on the world market. In accordance with 2005's budget, the oil price is estimated at $28 per barrel. However, on March 18, the economic development and trade ministry reported that corrections to the ministry's macroeconomic forecasts for this year would be based on an oil price estimate of $36 per barrel. Earlier the government commission suggested setting the average oil price estimate at $34 per barrel for the planning of 2006's budget. Additionally, the commission has considered different options for raising the "price limit," which determines the Stabilization Fund's parameters. The parameters of budget revenues, discussed with the economic development and trade ministry and the finance ministry, have been generally approved at the commission's meeting. These parameters are to be updated, depending on the data for the first quarter of 2005. The finance ministry has been assigned to provide a drafted budget plan for 2006-2008, reflecting the main aspects of the government's social and economic policies, within a week. In the meantime, the price of Brent oil has dropped below $54 per dollar for the first time over the past five trading days, today. Last time, the price was below that level as long ago as March 16, 2005, analysts noted. Light Sweet futures have so far been above $55 per barrel, but a decline in prices has become significant. The oil market trend mainly depends on two factors now: the forthcoming publication of the US Energy Department's report and profit taking. The rate increase by the US Federal Reserve has not had any direct effect on this market. The Federal Reserve's decision has only strengthened the dollar's positions on the world currency market. However, if this trend were continued, the interest of investment funds in speculative buys on the oil market would decrease, and this would facilitate a decline in oil prices in the future, analysts think.