In this week's highlights: The European gas market remains on tenterhooks over Russian gas supply, oil markets remain caught between surging summer demand, supply disruptions and growth concerns, while European policymakers attempt to balance security of supply and energy transition priorities.
- European gas crisis looms on low Russian supply (00:14)
- Summer oil demand surge drives steep backwardation (01:07)
- EU energy, environment ministers in crisis talks (02:20)
In this week's highlights: Oil markets remain caught between surging summer demand, supply disruptions and growth concerns, while European policymakers attempt to balance security of supply and energy transition priorities.
But first, the European gas market remains on tenterhooks over Russian gas supply, with Germany having moved to the second of three stages of its emergency gas plan last week and the head of the IEA warning that Europe needs to prepare for a full cut-off in Russian gas imports.
Gas deliveries via the Nord Stream pipeline from Russia to Germany have been cut to just 40 percent of capacity -- ostensibly on technical issues -- while flows through the Yamal pipeline are currently zero and supply via Ukraine remain at very low levels. Also, Nord Stream is due to be closed completely from July 11 to 21 for its annual maintenance shutdown.
We'll be looking out for any news on whether the return of a crucial compressor for Nord Stream sent to Canada for maintenance can be expedited. Berlin will be hoping Ottawa can find some solution that complies with its sanctions against Russia.
In oil, markets remain caught between the worsening economic outlook and pent-up summer travel demand for fuel combined with dislocations in traditional trade patterns supply disruptions. This has forced the market into a steeply backwardated structure, with prompt prices trading at large premiums to prices further forward.
Refining margins have also been hitting record highs, with retail fuel prices in parts of Europe now at above 2 euros per liter. A major contributor to this situation is Europe's clampdown on Russian oil, which is by and large heading to Asia instead.
With Russian crude challenging Middle Eastern varieties in the Asian market, the OPEC+ group faces a tricky balancing act at its next online meeting on Thursday.
And that takes us to our social media question for the week: Will OPEC+ decide to make any further changes to its plans at the upcoming meeting? Tweet us your thoughts.
A couple of other events are also worth watching out for this week: BP releases its annual Statistical Review on Tuesday – a look back at the last year in energy and some insight into what comes next.
Also, Russian energy big hitters Rosneft and Gazprom both hold their AGMs on Thursday, with their CEOs no doubt reflecting on a radically changed landscape.
Back to Europe, and EU energy ministers meet today to discuss amendments to renewable energy and energy efficiency directives, while a catch-up on the energy crisis will inevitably focus on emergency measures and energy prices.
With gas and power prices ramping up again, the political pressure to intervene further is impossible to ignore. The written agenda may be focused on energy transition, but all the talk will be about winter security, stores and how to account for these.
Also this week, EU member states are set to finalize their joint position on proposed legislation to reform the EU Emissions Trading System for 2030.
Key will be the overall level of ambition in the annual carbon caps out to 2030 and whether lawmakers can agree limits on participation in the market.
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.
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