In this week's highlights: Oil markets to focus on monthly reports from OPEC and the International Energy Agency, uncertainties around Russian gas continue to preoccupy European markets, and the coal embargo piles feedstock pain on the power sector.
- OPEC and IEA monthly reports this week (00:10)
- Russia gas worries continue for Europe (01:00)
- Coal embargo piles feedstock pain on power market (02:09)
In this week's highlights: uncertainties around Russian gas continue to preoccupy European markets, and the coal embargo piles feedstock pain on the power sector.
But first, the oil market will turn its attention to monthly reports from OPEC and the International Energy Agency this week to assess the extent of the fallout of lost barrels from the Russia-Ukraine conflict and shed some light on Russian-origin oil and Urals crude shifting away from Europe to Asia.
Supply and demand fundamentals will be revisited as the fear premium appears to have abated somewhat, with oil prices back down around the $100 per barrel mark after having spiked to almost $140 per barrel.
That comes following the announcement of an unprecedented release of strategic petroleum reserves from IEA member countries, including the US, along with signs of global demand destruction and lockdowns in China, and evidence of an abundance of light sweet crude in Europe.
In European gas, the market will again be watching developments with regard to Russia after new rules on payments in rubles came into effect and Ukraine again warned of potential risk to Russian gas transit.
It remains unclear whether the new requirement for EU buyers to pay in rubles could lead to any supply disruption in the event of companies refusing to comply with the new terms.
Russian deputy prime minister Alexander Novak said last week that some European companies and countries had agreed to the new procedure, while others continued to analyse it.
In the meantime, Russian gas flows to Europe via Ukraine continue as normal, though Ukraine's GTSOU has warned that Russian "interference" at a key compressor station in eastern Ukraine could lead to transit disruption.
Around one third of Russian gas transit volumes via Ukraine pass through the Novopskov compressor, which is currently under Russian control.
And that takes us to our social media question for the week:
Could the demand to pay in rubles lead to an interruption in natural gas supply to Europe?
Tweet us your thoughts.
In power, the market is digesting the impact of new EU sanctions on Russian coal.
European coal prices rose sharply following the announcement last week, with German importers scrambling to replace Russian cargoes.
German year-ahead power also rose, despite flat prices for forward gas contracts. Traders need to keep a very close eye on daily swings in wind, solar and demand trends to help preserve stocks for gas, coal and hydro.
All have become scarce in recent weeks, while nuclear is forecast to run at record lows all summer.
Grand plans for new reactors and an accelerated hydrogen economy will not, however, result in material change for many years. The current high price environment looks set to be with us for the foreseeable future.
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