In this week's highlights: The first Libyan oil exports in eight months are returning to the market; gas market participants watch closely the start of the new European gas year; power markets tackle low river levels; and a WTO panel meets to consider Turkish complaints over steep import safeguard curbs.
- Libyan oil flows as demand ebbs
- Europe to see start of new gas year
- Power markets await Chooz restart
- WTO sits on Turkey's EU steel complaints
In this week's highlights: Gas market participants watch closely the start of the new European gas year; power markets tackle low river levels; and a WTO panel meets to consider Turkish complaints over steep import safeguard curbs.
But first, oil markets will be closely monitoring high-frequency data for signs that new lockdowns to flow pandemic infection rates in key demand markets in the Europe and the US are once again hitting oil demand.
At the same time, the first Libyan oil exports in eight months are returning to the market amid a fragile truce between regional forces. The prospect of over 1 million barrels a day of light, sweet, Libyan oil hitting the market in the coming weeks as the demand outlook weakens will be bearish for oil prices and force OPEC and its allies to look closely at their current moves to ease agreed production cuts.
Key OPEC ally Russia is due to report its September oil production and export data on Friday and market watchers will be looking for evidence of compliance with its commitments under the OPEC+ agreement, as well as details of supply volumes to Belarus after a dispute lead to supply disruptions earlier this year.
And that takes us to our social media question for the week: How long do you think Libyan oil's return to the market will last? Tweet us your thoughts using the hashtag #PlattsMM.
Talking of returns, this week marks the start of the new European gas year on October 1st, with market players watching for any change in flow behavior.
It also marks the start of the "winter" gas season and, with EU storage stocks around 94% full, as seen in this graph, the market will be looking to see whether there are withdrawals early in the season or whether milder weather will mean limited stock drawdowns. Stocks across the EU were slightly fuller at this time last year, but that was when the market was fearful of disruption to Russian gas flows via Ukraine at the end of 2019, a scenario that did not play out.
Also, this year there is some 10 billion cubic meters of additional stocks in Ukraine, which has acted as an "overflow" for European gas storage when it looked like sites would hit tank-top earlier this summer. That surplus gas held in Ukraine is also expected to start coming to Europe through the fourth quarter on top of expectations of more Russian and Norwegian gas, as well as LNG, as winter demand starts to kick in.
Moving from an overflow to a drought, power traders are focusing on low river levels - not on the Rhine, where traditionally this issue affects coal deliveries - but on the Meuse in France, where EDF's huge Chooz nuclear plant has been offline since late August. It is scheduled to return early October, assuming river levels rise, allowing for a more normal cooling regime. Northwest European power supply should also get a boost from the emergence of two gas plants from mothballs - RWE's Claus C plant in the Netherlands, and two units at Uniper's Irsching plant in Germany.
European power prices spiked twice in September to levels not hit for years as low wind output tightened capacity margins, as you can see on the chart. That all changes if and when wind levels pick up into winter and the threat of negative prices rise in oversupplied offpeak hours.
And finally, a World Trade Organization panel will start to consider Turkey's complaint over EU steel import safeguard curbs on Monday. Turkey says these are protectionist and that there is insufficient proof of harm to EU steel mills to justify them. If the grounds for Turkey's complaint are approved by the panel, which includes representatives of 13 third nations, this could set a precedent for other nations to present complaints, especially as EU steel imports have recently fallen. A final report from the panel is expected within six months.
For more on all the issues affecting commodity markets from wherever you are, make sure to check out Platts LIVE at the address displayed on your screen.
Thanks for kicking off your Monday with us and have a great week ahead!