The European natural gas market will be looking for clarity this week on how US President Donald Trump will use new powers to impose sanctions on companies involved in Russian export pipelines. What will the impact of the potential sanctions be? In oil, OPEC compliance is expected to come under the spotlight; while in power, market concerns may ease after a blistering heatwave triggered a spike in prices. S&P Global Platts senior editor Peter Brennan takes a look at the week ahead.
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Video Transcript
In this week’s Platts Market Movers Europe: Big questions over the impact of potential US sanctions on Russian gas pipelines; OPEC compliance comes under the spotlight; and concerns ease after a blistering heatwave triggered a spike in power prices. In gas, the market will be looking for clarity on how US President Donald Trump will use new powers to slap sanctions on companies involved in Russian export pipelines.
The risk of sanctions could be serious for projects like Russia’s Nord Stream 2 pipeline to Germany — leading to extra costs, delays, or even halting the project. It all depends on whether they are applied and if companies react.
Our social media question today is ‘what will the impact be of the potential sanctions on Nord Stream 2?’
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Varying compliance with oil output cuts, highlighted in the recent S&P Global Platts OPEC survey, has moved the OPEC/non-OPEC producer coalition to call a meeting of technical experts on August 7-8. The meeting in Abu Dhabi will discuss how to shore up members’ commitments to their quotas.
In power, demand for gas is set to fall this week. Last week’s heatwave in which spot power prices spiked in Italy and Eastern Europe, is forecast to wane.
Further north, more reactor availability in Germany and France, and at times strong wind and solar, has reopened the prospect of falling prices after German power turned negative for some hours the Sunday before last.
Europe’s petrochemical industry will continue to assess the impact of the fire at Pernis, a key petchems hub in the Netherlands. The fire eight days ago at Shell’s Pernis refinery -- the largest in Europe -- led to a flurry of force majeures on petchems products -- as well as having a significant impact on a range of oil products. The fire also compromised production at Ellba's POSM unit in Moerdijk.
Indian steel mills are expected to return to the European hot rolled coil market this week with higher offers, further supporting domestic prices. Sentiment is defying the traditional summer slowdown as the change in Asian prices coincides with proposed anti-dumping duties and an upturn in demand.
India is the second-biggest source of HRC imports into Europe, and western European mills are widely expected to respond with further offer increases for Q4.
The impact of rising Libyan oil exports on the Aframax tanker market will be closely watched over the coming week. Libya is exempt from current OPEC cuts and production is currently above 1 million b/d.
There has been a rise in spot cargoes, with stems being exported from Zuetina, Farwah, Ras Lanuf and Mars el Hamra on a regular basis once more. Shipowners had hoped the return of Libyan exports would give the market a much needed boost -- but so far rates have remained subdued.
Thanks for kicking off your Monday with us and have a great week ahead.