• Oil: Up at $ 65.03/bbl for Brent ICE MAY15 (This morning at $ 65.26/bbl)


o    Crude prices rebounded slightly yesterday after the steep losses of Tuesday session. The drawdown in US crude inventories supported the prices although weak China data and general concerns about excess oil supply capped price gains. All in all, the crude markets remain uncertain and Brent holds around $65/b, almost back to its level ten days ago.

o    Main events: The EIA report yesterday showed a drop in crude stocks as expected (-2.1 Mb) and a significant decline of US output (-112 kbd).The decline of US commercial crude stocks continues for the third straight week with a cumulative -8.8 Mb loss. Main event was the strong decline of crude domestic production with a -112 kbd decline, the strongest since July 2014, and leading to the strongest monthly decline since Nov-13. Domestic US production is now below 9.3 Mbd for the first time since late February. Watching the data, it appears that the decline is actually due to a temporary decrease in Alaskan output and has no relation with fracked shale wells. China’s manufacturing sector contracted for a third straight month in May (according to HSBC flash PMI), hitting the lowest in 13 months, despite earlier reassurance from Chinese Premier Li that the world’s second largest economy can meet its 7 percent growth target this year. This is bad news for market as the main part of the 1.5-2 Mbd oil excess is due to be partially absorbed by china this year in order to tighten fundamentals… Data from Japan were better with manufacturing activity rebounding modestly in May as output and new orders picked up.

o    Outlook:Today, main drivers will be the series of economic data expected all day long from EU, UK and US and they should try to provide the market a better view of what H2-2015 could look like… About supply, there are more upward risks (Iran, OPEC, better resilience of US shale industry), but real uncertainties lie in demand with deep concerns about China and US… Maybe part of the answer today. We have rather bearish outlook for today and the  first support could be $64.4/b.



  • Gas: Up at 21.61 EUR /MWh for TTF CAL 16 (This morning at EUR 21.55/MWh)


o    Strong gas demand and ongoing maintenance work in Norway continued to support European spot prices on Wednesday, although overall movements remained limited at the close. Consumption in the residential sector remained 29% above seasonal norms in the UK, and 10 mm cm/day above average demand observed in the first two weeks of May in the Netherlands. On the supply side, Norwegian production was slightly lower than Tuesday although European systems were balanced as storage injection demand decreased further, providing some support to near-curve contracts

o    Uncertainty over Groningen production resurfaced as the Dutch Council of State is to hear an appeal on Thursday from a group of Groningen residents calling for a halt in production at the Eemskanaal cluster which has a 2 Bcm/y production quota. 0.54 Bcm has already been produced over the first four month of 2015 on this sector according to NAM monthly figures. A further cut in Groningen production seems unlikely as the court already ordered a halt in production at the Loppersum cluster on 14 April before a final hearing of all complainants in September (see graph hereunder).

o    NBP ICE June 2015 prices were stable at the close : +0.05 p/th (+0.12%), to 41.91 p/th. TTF ICE June 2015 prices were slightly higher at the close: +9 euro cents (+0.45%), to €20.447/MWh. Further out on the Dutch curve, a rebound in oil prices and a further drop of the euro against the pound provided support. TTF ICE Cal 2016 prices were assessed 12 euro cents higher (+0.54%), to €21.605/MWh, capped by their 20-day average.

o    With no major change on the supply side, lower demand forecasts for the coming days could weigh on European spot prices today. UK residential gas demand is expected to be 18 mm cm lower than Wednesday today, although strong exports to the continent through the IUK pipeline are keeping total gas demand in line with yesterday’s figures. Near-curve contracts could lose some value today, following the bearish trend at the front. Weaker oil prices could also exert some bearish pressure on the far curve.