OIL: Crude Higher As Focus Returns To Supply & Demand

The Australian Office of Financial Management (AOFM) will today sell A$400mn of the 4.25% 21 June 2034 Green Bond. The line was last sold on 8 April 2025 for A$400mn.

• The last sale drew an average yield of 4.1725%, at a high yield of 4.1750% and was covered 4.8875x. There were 41 bidders, 13 of which were successful and 6 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 51.0%.
• This week's ACGB supply is around the recent average weekly issuance of $1500mn, with A$1200mn of the 4.25% 21 March 2036 bond due on Friday.
• According to the Budget 2025-26 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance of Treasury Bonds (including Green Treasury Bonds) in 2025-26 is expected to be around $150 billion. Issuance of Treasury Indexed Bonds by tender is expected to be between $2 billion and $3 billion (additional issuance by syndication may be considered).
• For 2024-25, issuance of Treasury Bonds has been revised to around $100 billion, including around $2 billion of Green Treasury Bonds. Treasury Indexed Bond issuance will be around $3 billion.
• Results are due at 0200 BST / 1100 AEST.

• MNI: JAPAN APRIL SERVICES PPI +3.1% Y/Y; MAR REV +3.3%
• JAPAN APRIL SERVICES PPI +0.5% M/M: MAR REV +0.8%

European natural gas rose 1.9% to EUR 34.15 on Monday to be up almost 15% in May. It fell to EUR 36.60 before rising to EUR 37.36, a narrow range as the UK was closed. Prices were boosted by news of unscheduled maintenance at Norway’s major Troll field. As Europe refills storage ahead of next winter, gas remains sensitive to any unplanned outages.

• Norway has become more important as a supplier of gas to Europe since pipeline flows from Russia were cut and is likely to become more so with EU plans to phase out all Russian fossil fuels. Its gas centres are currently undergoing significant seasonal maintenance but with the focus on refilling any unplanned events are likely to move prices. 
• US gas fell 2.1% to $3.26 in holiday-thinned trading as forecasts shifted lower for the eastern US reducing the likelihood of a need for cooling. Bloomberg is reporting zero cooling degree days for the week ending May 31, less than average. Gas prices are now 1.9% lower this month.
• China’s LNG imports are expected to be down around 30% y/y in May, according to Bloomberg, as it resells shipments to benefit from higher prices, increased pipeline flows from Russia and its own production. Researchers associated with China National Offshore Oil believe that its use of gas will remain robust though with it doubling by 2025.