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• Oil: Closes at $46.12bbl for Brent ICE (This morning at $ 45.63/bbl)

Crude prices extended gains yesterday after prices hit two-week highs as tension rises in Middle East. Both Brent and WTI posted $1.29/b and $1.12/b gains and now trade close to their levels two weeks ago.
Main events:
– Turkey shot down a Russian warplane near the Syrian border yesterday, saying the jet had violated its air space. Russian President Vladimir Putin said the plane had been attacked inside Syria and talked of having “backstabbed”. Russia’s Foreign Minister Sergei Lavrov cancelled a visit to Turkey due today and Turkey asked for a special meeting of NATO. US President Barack Obama and French President Francois Hollande, meeting in Washington, urged against an escalation but this is bad news for the expected broad coalition against IS that was in the air after Paris attacks. Obama and Holland reconfirmed they want Assad gone while president Putin warned of “serious consequences” after the plane incident. The situation is worsening about Syria at a moment when something appeared possible and it seems the current status-quo could last a little bit more.
– Talking about the OPEC meeting (in 10 days), despite the glimmer of hope of Monday, it seems more and more likely the organization will stick to its guns next week. Iran, Algeria, Venezuela are still pushing strongly for supply cuts but Gulf delegates confirmed yesterday the cartel will not cut supply without non-OPEC producers: knowing that Russia clearly shows no will to reduce its output, there is almost no chance of a U-turn next week in Vienna. With Iran ready to boost exports as soon as sanctions are lifted, probably after mid-December, the fear of prices in the “Mid-20’s” raised by Venezuela recently could become true in the near future…
– Ahead of the EIA stocks report this afternoon, data from API group showed that US crude stocks rose by +2.6 Mb in the week to Nov. 20, far above analysts’ expectations of +1.2 Mb.
Outlook:
Today, a large set of US indicators as thanksgiving (see daily eco) is tomorrow and Friday is off. For the same reason, Baker Hughes will publish its weekly rig count for last week today for the same reason. But the real market mover for Brent traders today will be the EIA stocks report at 4:30 pm. It is expected bearish and prices already unexpectedly jumped this week and they are now capped with the 20-days average: for these reasons, we see more downward risks today with a first support at $45.2/b.

• Gas: Closes at 17.57EUR /MWh for TTF CAL 16 (This morning at 17.68EUR /MWh)

European gas prices were mixed yesterday. Spot prices dropped on the back of weaker demand and higher Norwegian supply. By contrast, curve prices were higher, supported by the geopolitical risk in the Middle East after Turkey shot down a Russian airplane near Syria and also the announcement that Russia would halt gas supplies to Ukraine after Kiev stopped pre-payments for future deliveries.

At the close, NBP ICE December 2015 prices increased by 0.40 p/th (+1.08%), to 37.380 p/th. TTF ICE December 2015 prices were also higher, earning 23 euro cents (+1.34%) at the close, to €17.423/MWh. The same for TTF ICE Cal 2016 prices: + 21 euro cents (+1.23%) at the close, to €17.569/MWh.

Norwegian flows are higher this morning. Along with weaker demand due to rising temperatures, this could continue to push European spot prices lower today. As for 1st nearby prices, their momentum is still bullish this morning but we expect the rise to fade gradually, particularly as prices should face a strong technical resistance around the 20-day average.

On the far curve, we favour also a bearish outlook for cal 2016 prices, as oil prices should not be supportive.