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Watch: Market Movers Europe, Aug 1-5: Gas supply concerns drag on sentiment across commodities

In this week's highlights: Oil markets face fears of both a potential recession and supply tightness; Germany's response to Russian gas disruption is in focus; a veteran UK nuclear power station closes for good; and results season continues in the steel sector.

  • Recession fears, oil supply tightness in focus (00:10)
  • Europe braced for next phase in gas emergency (00:54)
  • End of the road for Hinkley Point B nuclear station (01:38)
  • Results season in the steel sector (02:12)
View Full Transcript

In this week's highlights: Germany's response to Russian gas disruption is in focus; a veteran UK nuclear power station closes for good; and results season continues in the steel sector.

But first, in oil, the market is being pulled one way by mounting fears of economic recession but in the opposite direction by ongoing worries about supply tightness and a lack of spare capacity globally.

For the European oil and gas majors, which have been reporting Q2 results, it's a time of bumper profits but also tense relationships with governments, over windfall taxes and alleged under-investment.

On Wednesday, all eyes turn to OPEC+, as Haitham al-Ghais of Kuwait takes up the reins from the late Mohammed Barkindo as secretary general, at an online meeting of the producer group.

A decision on what to do about September quotas comes amid pressure for more production, including from US President Joe Biden, and rising fears that spare capacity may be limited to just two countries, Saudi Arabia and the UAE.

In European gas, as Gazprom suspends supplies to Latvia over the weekend claiming violation of the conditions for gas withdrawal, the market braces for the next stage in Germany's emergency response to the threat of Russian gas disruption.

Nord Stream flows were reduced again last week, halving to 33 million cubic meters a day. Reduced flows are seen as insufficient to replenish German gas stores in time for winter. They are around 67 percent full currently, still some way off government targets ahead of the winter.

Talk of rationing is becoming a reality in some cities with swimming pools closed, standby lights turned off and municipal services restricted. Relief could come if Russia's Gazprom re-installs a turbine at the Portovaya compressor station and ramps flows back up, but few are banking on this.

In power, the veteran Hinkley Point B nuclear power station in the UK is due to breathe its last today, taking the country's operational nuclear capacity below 6 gigawatts. Over the next few years hundreds of rail transports will ferry spent fuel containers from Somerset to Sellafield ahead of decades of site decommissioning.

For the market, the timing is sub-optimal – the UK needs all the non-gas thermal capacity it can get its hands on, but replacement nuclear is still years away, with only the sunniest of optimists expecting a first unit at the Hinkley Point C plant to be online by June 2027.

In the steel sector, most steelmakers have had a generally positive first half of the year given the high commodity prices in the wake of the war in Ukraine. However, the outlook for the second half of the year is less positive because of price declines, recession fears, and rising interest rates and production costs.

German steel stockholder Klockner & Co will release its H1 results on August 3, followed by Austria's Voestalpine and Finland-based stainless steel company Outokumpu on August 4.

Russian steel company Evraz is also due to release its results early August.

And finally, our social media question for the week: Are the output cuts in European steel sufficient to stabilize prices for demand revival in Q3? Tweet us your thoughts.

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!