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Market Movers Europe, Jan 24-28: Commodities remain on knife edge despite reduced gas price driver

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Avaliação de Preço do Dated Brent

Assistir: Market Movers Europe, Jan 24-28: Commodities remain on knife edge despite reduced gas price driver

  • Apresentando
  • Henry Edwardes-Evans
  • Commodity
  • Energia Energia elétrica GNL Gás natural Petróleo Produtos petroquímicos
  • Comprimento
  • 03:46

In this week's highlights: Russia-Ukraine tensions put Dated Brent above the $90 mark, gas prices remain below December highs, EDF power workers in France get ready for a snap strike, and petrochemical contract negotiations near a conclusion amid multiple cracker outages.

  • Geopolitics spur oil price rally (00:16)
  • Gas deliveries sharply down (01:21)
  • Upside price risk as nuclear limps through winter (02:14)
  • Petrochemical contract price negotiations (02:47)
Visualizar Transcrição Integral

In this week's highlights: Gas prices remain below December highs, EDF power workers in France get ready for a snap strike, and petrochemical contract negotiations near a conclusion amid multiple cracker outages.

But first, in oil, prices have hit seven-year highs in recent days, spurred by a recovery in mobility levels and expectations of a return to pre-pandemic demand levels this year.

Also fueling bullishness in the market are worries over spare capacity among key producing nations, sluggish progress towards getting Iran's sanctions lifted, and rising tensions over Ukraine.

In Europe, Dated Brent prices topped the $90 mark in recent days, with Ukraine clearly a factor. However, there are also some causes for relief, with Norwegian production hitting 11-year highs according to latest official data, spurred by the Johan Sverdrup field.

Meanwhile Libyan output also appears on a recovery path and Kazakhstan's CPC crude loadings seem to be normalizing.

And that takes us to our social media question for the week: Will the crude oil price surge hit the hundred dollar mark? Tweet us your thoughts using the hashtag #PlattsMM.

In European gas, prices have stabilized at high levels if below December's monster spike as higher LNG supplies offset lower Russian exports.

Russian gas deliveries into Europe have fallen sharply since the start of 2022, with traders set this week to continue watching flow levels closely for any sign of an uptick in exports, especially on the route via Ukraine.

Supply via Ukraine has been significantly reduced this month despite Gazprom having 110 million cubic meters per day of capacity booked under its five-year transit deal with Kyiv.

While Russian military action in Ukraine would obviously spark concern over supplies, Gazprom has not delivered gas to Europe via Belarus for a month, a route it could use to flow gas to Europe instead of the Ukrainian corridor.

In power, workers at French utility EDF are to stage a 24-hour strike starting tonight, potentially coinciding with a dip in temperatures and wind output.

Strikes rarely have much impact on output, but the timing is less than ideal at a time of record-low nuclear availability in Germany and France due to closures and outages.

Upside price risk remains then, not least because of an unprecedented ten French reactors being offline this month.

Turning to petrochemicals, feedstock olefins contract price negotiations for February should reach their conclusion this week amid multiple planned and unplanned cracker outages across Europe.

Downstream, polymer demand remains firm. Despite this, buyers have shown resistance to accepting higher offers in the spot market in the opening weeks of 2022, with sellers already attempting to raise prices amid higher energy and transport costs in late 2021.

Any additional increases could open up attractive arbitrage opportunities into Europe and cause buyers to review their spot and contract volume ratios.

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Thanks for kicking off your Monday with us and have a great week ahead!