The oil industry will be trying to find its feet this week after being pummeled by natural disasters in the Gulf of Mexico that have disrupted global trade, in particular causing a surge in oil-product imports from Europe into the region.
Part of the weather’s effect on the oil market can be seen in US and European refining margins rising to two-year highs after Hurricane Harvey caused outages. However, this has not yet translated into higher differentials for European and African crudes.
Meanwhile, infrastructure issues might also have an impact on French natural gas prices. Planned maintenance this week will reduce flows from the Fos Tonkin and Montoir LNG terminals in France, as well as the Russian Nord Stream gas pipeline to Germany. Staying in France, power prices there might rise too on worries about nuclear plant availability.
Finally, the European petrochemicals markets will be keeping a close eye on progress to repairs to part of the key rail freight route between northwest Europe and Italy.
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Video Transcript
Welcome to Platts Market Movers. In this week’s highlights: Oil markets are still being buffeted by the impact of Hurricane Harvey; US and European refining margins hit two-year highs, and there are fears of higher gas prices in France.
The oil industry will be trying to find its feet this week after being pummeled by natural disasters in the Gulf of Mexico that have disrupted global trade, in particular causing a surge in oil-product imports from Europe into the region.
Monthly market reports from OPEC and the International Energy Agency should provide insights into the bigger picture for oil supply and demand.
And for the shipping industry, the big event is London International Shipping Week, where an impending global crackdown on emissions by the regulator is sure to dominate proceedings.
Part of the weather’s effect on the oil market can be seen in US and European refining margins rising to two-year highs after Hurricane Harvey caused outages.
However, this has not yet translated into higher differentials for European and African crudes. This looks likely to change in the near future, with more hurricanes and storms looming in the Americas.
While there has been little impact on specific crudes, the crude complex as a whole remains supported by the market’s view that the effect of the extreme weather has been more severe on oil production than refining.
And our question for social media this week: Have price moves on the US storms been over - or underdone? Tweet us your thoughts using the hashtag #PlattsMM.
Infrastructure issues might also have an impact on French gas prices. Planned maintenance this week will reduce flows from the Fos Tonkin and Montoir LNG terminals in France, as well as the Russian Nord Stream gas pipeline to Germany.
This combined with persistent worries about nuclear power availability could push up prices, particularly in the south where storage levels are low.
A similar scenario last year caused the southern TRS day-ahead price to peak at 22 euros a megawatt-hour. TRS day-ahead is currently around 17 and a half euros.
Staying in France, power prices there might rise too on worries about nuclear plant availability.
The market is awaiting further details of a review by the regulator that could lead to more unplanned outages at French nuclear power plants this winter.
This comes as higher coal, gas and carbon prices are already lifting European power prices. The EU carbon price is now above 7 euros a metric ton for the first time since April last year, as traders expect progress in talks this week on planned reforms to the EU Emissions Trading System after 2020.
Finally, the European petchems markets will be keeping a close eye on progress to repairs to part of the key rail freight route between northwest Europe and Italy.
The Karlsruhe-Basel stretch was damaged by water ingress in mid-August and is expected to be repaired by early October.
The disruption has caused an increase in freight rates for truck deliveries for chemicals from Northwest to Southern Europe, in particular Italy, as traders seek alternative transportation.
Thanks for kicking off your Monday with us and have a great week ahead.