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Watch: Market Movers Europe, July 18-22: Gas markets pin hopes on Nord Stream's return, heatwaves threaten thermal plant operations

  • Featuring
  • Kelly Norways
  • Commodity
  • Energy Coal Energy Transition Natural Gas
  • Length
  • 03:32
  • Topic
  • Europe Energy Price Crisis

In this week's highlights: The European gas market remains consumed by uncertainty over the Nord Stream pipeline, heatwaves across Europe threaten thermal plant operations, airport passenger caps dent jet fuel demand, and the UK's critical minerals strategy is in focus.

  • All eyes on Nord Stream return (00:10)
  • Heatwave threatens thermal plant operations (01:32)
  • Airline disruptions dent jet fuel demand (02:08)
  • UK Parliament to discuss Critical Minerals (02:39)
View Full Transcript

In this week's highlights: Heatwaves across Europe threaten thermal plant operations, airport passenger caps dent jet fuel demand, and the UK's critical minerals strategy is in focus.

But first, in European gas, the market remains consumed by uncertainty over the Nord Stream gas pipeline and whether it will return from its annual maintenance this week as scheduled -- and if it does, at what level.

Flows on the key supply artery were already running at below half of capacity because of issues with the return of a compressor sent to Canada for refurbishment, before they were suspended completely for routine maintenance on July 11. Operations are set to resume July 21, in what could be a pivotal day for Europe's energy outlook for the rest of this year and beyond.

In the meantime, the market awaits news on that gas turbine after Canada gave a sanctions exemption to allow its return to Russia. But doubts whether all the necessary protocols are in place mean the timings remain up in the air.

As this chart shows European gas prices have risen sharply back towards record highs since Russia's state-controlled Gazprom cut flows through Nord Stream to just 40% of capacity in mid-June, citing the compressor issue.

Without full Nord Stream flows, Europe will struggle to refill its gas storages ahead of the next winter, despite extensive efforts to source alternative gas supplies, leaving the market in a precarious situation.

And that takes us to our social media question for the week:

Can Europe meet its winter gas storage targets, or should the continent prepare for a switch back to conventional hydrocarbons? Tweet us your thoughts.

Heatwaves across Europe meanwhile are providing a more immediate problem, as falling river levels and rising temperatures threaten thermal plant operations in France and Germany.

French utility EDF has warned that rising temperatures could force outages at four nuclear plants due to cooling water restrictions, while in Germany coal barges are struggling to navigate the infamous Kaub pinchpoint on the Rhine.

Temperatures are set to ease from midweek, but the hot summer is drawing on already low hydro reserves across the continent – yet another bullish factor ahead of winter with French Q4 peak power already trading above 1,700 euros per megawatt hour last week.

While the warm weather has ushered in summer flying season, market watchers will be closely following airline scheduled capacity this week due to ongoing challenges created by staff shortages, mainly on the ground, in many European airports.

Heathrow and Schiphol - two of Europe's busiest airports - recently announced daily passenger caps to mitigate flight disruptions.

Demand uncertainty and healthy import levels from East of Suez markets have weighed on jet fuel prices, which have dropped more than $300/mt over the past month.

In the UK, government business continues despite Prime Minister Boris Johnson's resignation, with the All-Party Parliamentary Group on Critical Minerals set to advise government on its critical minerals strategy in the House of Commons today. Recommendations will focus on the development of domestic production for minerals crucial to the energy transition, such as lithium, copper and tin.

The Critical Minerals Association is also expected to present a paper focusing on accelerating security of critical mineral supply, considering the country's geological limitations.

The UK government has a key role to play in underwriting projects to help de-risk and attract investors, according to the CMA.

The Platts Atlas of Energy Transition is your map to the sustainable commodity markets of the future. You can explore the Atlas by visiting the address displayed on your screen.

Thanks for kicking off your Monday with S&P Global Commodity Insights!