This week in European commodity markets: the oil market will be honing in on the build-up to a key meeting of OPEC and non-OPEC ministers in Algiers this coming weekend, new swap on West African crude is set to be born, Gazprom will launch its European gas sales platform, and the future of German coal and global steel capacity is under the spotlight.
In this week's highlights, a new swap on West African crude is set to be born, Gazprom will launch its European gas sales platform, and the future of German coal and global steel capacity is under the spotlight.
But first: The oil market will be honing in on the build-up to a key meeting of OPEC and non-OPEC ministers in Algiers this coming weekend.
The Joint Ministerial Monitoring Committee will return to the scene of an agreement between OPEC and key non-OPEC oil producers two years ago that laid the groundwork for a 1.8 million-barrel-a-day production cut.
The meeting will be chaired by Saudi energy minister Khalid al-Falih and attended by ministers from Algeria, Iran, Kuwait, Oman, Russia and Venezuela. They will assess how the agreement should be carried forward. The agreement's effectiveness is increasingly being questioned due to plunging production from Iran and Venezuela. US sanctions are set to be reinstated on Tehran in November, causing buyers of Iranian crude to seek alternatives. Venezuelan production has been crippled by a political and economic crisis.
Staying with oil, commodity exchange ICE launches a new cleared swap for West African crude Monday. It builds on a brokered swap that has met with great market interest from the start.
The advent of the swap has recently boosted trading in four crude grades from Nigeria in the S&P Global Platts Market on Close process over the last two weeks. The grades in question are Bonny Light, Qua Iboe, Forcados and Bonga.
Indications from oil majors and trading houses on the four grades making up the swap have brought transparency to a market that has traditionally traded more privately. Traders say they expect public bids and offers on these grades to continue if interest in the new swaps remains high.
ICE is not the only company in the energy world launching a new trading product this week. Russian gas giant Gazprom is set to launch its European sales platform.
More than 1 billion cubic meters of gas are to be offered during auctions that run to the end of the fourth quarter. The sales will be held via Gazprom's own Electronic Sales Platform, a tool that replaces the email-based auction system Gazprom ran in 2015 and 2016.
The gas will be for delivery into a number of European sales points across Germany, Austria, Slovakia and the Czech Republic.
Moving from gas to rival fuel coal, Germany's coal commission is to meet again Tuesday to discuss the future of the country's coal-fired power stations. Tension is high, with anti-coal representatives in the commission angry at police action to clear protesters from land designated for a new lignite mine.
The commission has to deliver majority-based recommendations by November. That will be a difficult task, given the diverse interests within the commission – and the competing demands of cutting emissions, preserving jobs and maintaining security of electricity supply.
That's our social media question this week: Does coal-fired generation still have a future in Europe? Tweet us your thoughts with the hashtag #PlattsMM.
In the metals markets, it's also a week of meetings.
The OECD's Global Forum on Steel Excess Capacity will run Wednesday and Thursday in Paris. Chaired by Argentina, the meeting will seek to improve the exchange of information between countries to help reduce excess global steelmaking capacity.
It comes after a report by the OECD was released last week saying global steelmaking capacity was expected to increase by nearly 52 million metric tons between 2018 and 2020. The new capacity comes at a time when there is already excess capacity of 561 million metric tons worldwide. Elsewhere, the International Rebar Producers and Exporters Association will meet in Istanbul. This will be an opportunity for the industry's key players to negotiate prices with an eye on the fourth quarter.
And let's close this edition of Market Movers with an expiry. Carbon allowance options on ICE Futures Europe exchange are set to expire Wednesday, meaning extreme price volatility looks set to continue in the European carbon market this week. Carbon prices dropped like a stone last week, plunging almost 30% to below 19.00 euros a metric ton after hitting 10-year highs of nearly 26 euros on September 10th. Some market observers had warned that the expiry could prompt sharp falls. Now the market has plummeted the question is: Could carbon prices be about to rebound?
Thanks for kicking off your Monday with us, and have a great week ahead.