The energy market continued to consolidate last week as the data on U.S. crude oil inventories showed the initial signs of a reduction in U.S. output. We were also interested in the agreement reached with Iran on its nuclear program, since this could eventually have an impact on the energy market.
- According to data released by the U.S. Department of Energy on Wednesday, the country's oil output fell by 36,000 barrels per day in the week ended on March 27. Despite rising inventories, this first sign of a slowdown in U.S. output was well received by analysts, who believe that it was due to the decline in active drilling rigs. The correction in energy prices also appears to be supporting demand for U.S. oil, which was up 2.7% from the same period last year.
- Following 8 days of seemingly endless negotiations, Iran and the major international powers finally reached an agreement on Iran's nuclear program. Negotiations will continue over the coming months to reach a final agreement by June 30, 2015. The lifting of sanctions will allow Iran to begin oil exports again, which represents the country's driver for economic growth. Over the coming weeks we will be paying close attention to developments in these negotiations.
- Clearly it is very difficult to say where prices may go over the next few weeks, but we believe that the recent consolidation of oil prices presents a good opportunity to implement hedges for the rest of 2015 and early 2016.
Have a good week!
Emmanuel Tessier-Fleury