It was another strong week for crude, with Brent reaching the highs of $111/bbl despite the short-term weakness on the announcement of cease-fire in Gaza. Looking at supply/demand environment, while we have seen some improvement on the supply side, short-term tightness on the physical market continues to be supportive. Thus, Statoil’s Troll C platform was brought on-stream (120kbpd capacity) while Shell lifted the force majeure on its Nigerian Bonny Light exports (have been off for more than a month). However, in the North Sea 2 more December Forties cargoes were delayed, making it a total of 4 deferrals for the month and adding to 8 delays from Ekofisk cargoes. Moreover, Shell force majeure on Focados is still in place while negotiations between South and North Sudan are taking longer-than-expected. On the demand side, China remains the bright spot in otherwise uninspiring environment. Latest customs data showed October crude imports were up 18% y/y.

Thermal coal continued to grind higher, +0.7% this week, even though fundamental picture is not much different. Despite the recent gains in prices, they are still close to marginal costs and the upside to prices is capped by the high inventories in China. Thus, Chinese imports are expected to pick-up only after the Lunar Year in February.

NBP (UK gas) had a strong week, with 1-month forward price up 1.4%. Prices remained strong on the back of colder temperatures expected into the week-end and next week. Supply/demand balance has remained tight, as volatility in supplies continued to put pressure on inventories.

US natural gas prices (Henry Hub) gained 2.9% with the front-end rising to the highs of $3.9/mcf. Similar to NBP, weather remains the key driver, further helped by continuing nuclear disruptions (temperatures last week were 23% colder than last year and 9% colder than the 10-year average). This week’s DOE figure was bullish once again, showing a 38bcf withdrawal vs. -28bcf expected.

After the massive sell-off of last week, CO2 bounced a little to €7/t level (+0.9% on the week). There is further selling pressure as part of the ongoing EU auction of volumes under Phase 3 (a total of 21mn tons worth of permits sold this week). Given the lack of news expected in the coming days, prices are likely to stabilise at around €7/t level.

German power prices were down 0.7% with dark spreads losing 0.6% (holding the €12-12.5/MWh level). Nord pool, on the other hand, gained 0.1%, helped by the rebound in CO2 as well as expectations of lower temperatures in the coming days.

Baltic Dry Index (BDI) had a strong week, +4.6%. The gains were largely driven by the Panamax segment as increased Indian purchases (as we discussed last week) are keeping the volumes busy. Capesize was largely flat due to fewer booking on the Brazil-China route.

Front Row represents the personal view of Rodrigo Rodriguez, European Head of developed cash trading for Credit Suisse.

Thanksgiving week, a good time for all of us to thank God for being part of that small percentage in the world of privileged people who have a house , a job and hot food on the table everyday (unless you prefer salads…). Continue reading Front Row: Thanksgiving Week →

Front Row represents the personal view of Rodrigo Rodriguez, European Head of developed cash trading for Credit Suisse.

I am flying to Spain today in order to bring my family back and stop my “London Madrid “ weekly commute, I honestly have to say that I need them back!!!…I miss my wife and the little beast but more importantly this morning I could not find my car keys and I had to take a cab to work …I need to be back to a normal family life, without excesses, even boring if you want sometimes, but consistent and productive.  Continue reading Front Row: The Next Catalyst →

Despite all the intra-week drama, Brent ended the week flat. While at the Oil & Money conference this week there was a general agreement that supply is abundant, a view that we reiterated by both IEA and OPEC’s estimates of further North American oil production, short-term supply developments helped support Brent. Despite December loadings of Forties earlier being predicted to be the highest since June, this may no longer be the case as there are now reports of at least one cargo being delayed by at least a couple of days. Moreover, Statoil has temporarily shut down its Troll C platform due to corrosion. This closure will deprive the markets of 120kb/d while an investigation is carried out, and there is no estimate as to when it will reopen. Elsewhere, escalating tensions in the Middle East also helped Brent prices.Coal markets have slowly but steadily added to last week’s recovery. The demand picture remains uninspiring among the main importers. Chinese port and utility stocks remain at elevated levels and that is tempering prompt import demand. Although the winter destocking season is expected to help, the rate at which these inventories are drawn is expected to be the key factor in determining when they return to the prompt market. If these utilities continue to rely on inventories until the Lunar Year festivities in February, then import demand at the prompt is expected to pick up late Q1. Elsewhere in the region, there is a contrast, in that Indian power plant stocks are down significantly to the lowest level of the last few years. The depreciating rupee continues to pose a limitation, as the country relies on less expensive Indonesian sub-bituminous cargoes for now, but eventually some support can be seen for international prices given that these plants are carrying 4-5x less stock than is officially recommended.

UK natural gas prices were strong, with 1-month forward price gaining 2.3%. Prices remain supported by colder temperatures expected in the next 10 days, with demand expected to gain c.15-20% over the weekend. Volatility in supply, particularly from the North Sea, is also helping the prices.

US natural gas prices have risen drastically a few days before the storage report on Thursday as the market anticipated the first withdrawal following the injection season. The storage change indeed turned out to be a withdrawal, which was 18 Bcf, 4 Bcf lower than the expected 22 Bcf. The withdrawal was entirely concentrated in the East, where incremental heating demand and power demand from nuclear outages offset the demand destruction caused by Hurricane Sandy.

It was a wild week for the carbon market. On Monday, prices jumped almost €1/t as the EC brought its announcement on planned intervention in the market forward by two days. The announced proposal was that it would remove volumes of 900mt from the cap in the 2013 to 2015 period and would only return it in 2019 and 2020. The proposed number however fell short of the 1.2bn that was rumoured earlier. The following two days the market then fell on profit taking, the start of EC auctions through the centralised platform and confirmation by the EC that 1Q13 volumes would not reflect the back ending.

German power prices gained 0.2% this week while dark spreads gained 9.4% in the same period. The sharp sell-off in CO2 helped dark spreads recover from the lowest level since September 2010. Nord pool was flat this week, due to expectations of high precipitation in the Nordic region in the coming days.

BDI gained 8.9%, reversing its losses of the last week as both Capesize and Panamax rates recovered. For Capesize, the main driver was pick-up in activity on Brazil-China route, while the pick-up in Panamax is largely attributed to booking to India.