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Watch: Market Movers Americas, Dec 6-10: White House eyes fuel prices, Brazil steelmakers seek US quota increase

  • Featuring
  • Kelsey Hallahan
  • Commodity
  • Energy Natural Gas Oil
  • Length
  • 04:24
  • Topic
  • US Policy

In this week's Market Movers, with Kelsey Hallahan:

*Two new reports will shed light on the future of fuel costs (00:26)

*Brazilian steelmakers prepare to challenge Section 232 tariffs on US import quotas (01:14)

*Warmer-than-normal forecasts could dampen the winter outlook for US gas pricing (02:09)

*Tanker owners express optimism for higher near-term freight prices (03:24)

View Full Transcript

In this week's Market Movers: Two new reports will shed light on the future of fuel costs, Brazilian steelmakers prepare to challenge Section 232 tariffs on US import quotas, warmer-than-normal forecasts for the next two weeks could dampen the winter outlook for US natural gas pricing, and tanker owners express optimism for higher near-term freight prices.

Starting with oil, the Biden administration's next steps addressing high fuel costs could be influenced by two reports this week. The Energy Information Administration's Short-Term Energy Outlook on Dec. 7 will contain the latest projection of US gasoline prices, a number the White House will be watching closely after officials expressed frustration that retail prices have not fallen as quickly as crude oil futures.

Also, inflation data due out Dec. 10 will show whether energy costs remain the largest component of surging consumer prices. President Biden last month ordered a major release from the Strategic Petroleum Reserve after weeks of pressure with pump prices at seven-year highs.

Turning to steel markets, Brazilian steelmakers expect to increase steel slab exports by reaching an agreement with the US over the hard quota imposed as part of the Section 232 tariffs in place since 2018. The annual US import quota for semi-finished steel from Brazil totals 3.5 million metric tons, divided into quarterly quotas of 1.05 million metric tons through the first nine months of the year, with about 300,000 metric tons remaining for the last quarter. A group of CEOs will head to the US in January to discuss the potential quota increase to 4 million metric tons per year or, as a last option, resume conversation over the volume prevented from export in 2020's last quarter, which reached about 290,000 metric tons.

In natural gas, temperature outlooks show that the first two weeks of December will likely be far warmer than normal in the eastern and southern US, which has bearish implications for natural gas spot and futures prices. The forecast for above-average temperatures and subsequent expectations for lackluster heating demand coincides with a dramatic increase in US natural gas production over the last month, with daily volumes repeatedly exceeding 95 billion cubic feet per day. Already, the NYMEX Henry Hub prompt-month natural gas contract has fallen to its lowest level since August, dropping to 4 dollars and 6 cents per MMBtu last week after spending most of October and November above the 5-dollar mark. As US supply and demand fundamentals loosen, some analysts have suggested that strong European and Asian gas prices could keep a floor under the US natural gas benchmark price.

This brings us to our social media question of the week: How heavily do global gas dynamics impact US Henry Hub pricing? Tweet us your thoughts using the hashtag #PlattsMM.

Lastly, freight for clean tankers loading on the US Gulf Coast took a downturn around the US Thanksgiving holiday; but as the end of the year nears, owners are hopeful for a freight contango to come into effect. Charterers have opened cargoes further into mid-December laycans, and owners expect cargo supply out of the US Gulf Coast could increase as refiners export extra product inventory by the end of the month. Winter typically brings higher freight for clean tankers, but due to lower product demand in the pandemic market, seasonality effects have been dampened. Outlooks are unclear as the new coronavirus omicron variant spreads across the Western Hemisphere.

The Platts Atlas of Energy Transition is your map to the sustainable commodity markets of the future. You can explore the Atlas by visiting the address displayed on your screen. Thanks for kicking off your Monday with us and have a great week ahead.