Nastural Gas Flame

Oil: close at $ 50.46bbl for Brent ICE (This morning at $ 50.10/bbl) 

Brent prices finally rebounded last Friday after a week of strong decline where they posted $4/b loss. The barrel of Brent is back above $50/b this morning and WTI trades a few cents above $47/b. Gain mostly came from the November contract expiration on Thursday evening. The negative sentiment was fuelled last week by very bearish stock levels in US and it was confirmed yesterday by US and EU taking legal steps in order to lift sanctions on Iran while Chinese GDP overnight reminded the markets that the situation there is far from being stable.

Main events:

– China’s GDP figures showed growth slowed to 6.9% between July-September, almost in line with markets expectations (6.8%). This growth ratio is the slowest since the global financial crisis and it comes after a 7% last quarter (see daily eco for details).

– About Iran, yesterday was the “adoption day” for the agreement reached by Iran and the P5+1 group (US, Britain, France, Germany, Russia and China) : the EU formally enacted the legislative framework for lifting all nuclear-related economic and financial sanctions on Iran by publishing the documents on its official website. In Washington, President Obama directed the secretaries of state, treasury, commerce and energy to “take all necessary steps to give effect to the US commitments with respect to sanctions described in (the Iran deal)”. Iran had passed a law on Oct. 14 approving the terms of the nuclear deal. Last week, the IAEA said Iran had given it the information it needed to assess whether its past activities had anything to do with nuclear weapons, a condition that was part of the deal.

We see that all parties are doing their part of the deal in time and we are now waiting for the final green light of the IAEA: implementation can be expected to take place at the end of the year or the beginning of next year.

– According to JODI, Saudi Arabia’s crude oil exports fell by -278 kbd in August down to 6.998 Mbd.

– According to the weekly Baker Hughes rig count, US oil drillers cut another 10 rigs last week and they now have less than 600 active rigs.

Outlook: Not so much indicators today, major ones will come at the end of the week. Brent prices seem to stabilize around $50/b to set a new trading level, 2$ above September’s level. We see a consolidation today around $50/b before markets find a clear direction this week. 

 

Gas: Close to close  at 18.34EUR /MWh for TTF CAL 16 (This morning at 18.55EUR /MWh) 

An unplanned maintenance that will reduce Norwegian output by 30 mm cm/day today and 52 mm cm/day tomorrow lent small support to European spot and near curve prices last Friday.

At the close, NBP ICE November 2015 prices dropped by 0.12 p/th (-0.30%), to 40.360 p/th; but this fall was due to the fall in the euro against the pound as prices were slightly higher in euro terms. TTF ICE November 2015 prices were also slightly higher, earning 3 euro cents (+0.14%) at the close, to €18.198/MWh. The same for TTF ICE Cal 2016 prices: +2 euro cents (+0.09%) at the close, to €18.342/MWh. 

As expected, Norwegian supply is lower this morning, Langeled flows being the most impact by the reduction. As a consequence, the UK system is significantly short this morning, which is supporting NBP spot and near curve prices. However, we don’t expect this bullish momentum to last as flows from the other supply components could increase. Moreover, temperatures are expected to rise this week, to levels closer to normal, which could curb demand. 

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