In this week's highlights: Gas prices continue to rise, OPEC+ meets to review production, and the European sugar campaign gets underway.
- Gas prices continue to rise
- OPEC+ meets to review production
- European sugar campaign gets underway
In this week's highlights: Gas prices keeps on rising; OPEC+ meets to review production; and the European sugar campaign gets underway
First to gas, where we started off the new gas year on October 1 with the benchmark TTF day-ahead gas prices having surged through the Eur85/MWh mark to yet another all-time high. The market will be keeping its focus on incoming flows from its major suppliers this week, in particular Russia, which is the only one that has not been running at more or less full capacity lately.
Deliveries via the Mallnow entry point on the border between Poland and Germany have been erratic in recent months, with market players keeping a close eye on nomination data for any signs of increased -- or further constrained -- Russian supply.
With the gas winter now underway, the current sky-high gas prices and tight market outlook will continue to fuel concerns of demand destruction, with some industrial users, including a number of fertilizer manufacturers, already having idled or cut back on production due to high prices.
And that takes us to our social media question for the week: When can we expect to see European gas prices return to more normal levels? Tweet us your thoughts using the hashtag #PlattsMM.
Turning to oil, OPEC and its allies are meeting today to decide on November production levels, in a market where oil prices have been recently touching three-year highs. This has brought renewed pressure from the White House for the oil producer alliance to take action to tame the rally, and the market seemed to be pricing that in at the end of last week.
The 23-country OPEC+ coalition is currently set to increase crude output by 400,000 barrels a day each month through to the end of the year, but a key reason for the monthly meetings was to allow for changes to that program -- if there is agreement among the countries. Some market observers think the group could go for an 800,000 barrel a day increase this time around, with many forecasts pointing to a tight market for the rest of 2021. How much more oil to produce without jeopardizing the price recovery will be a critical question for the alliance.
The new European sugar campaign has officially begun. The majority of factories in France have begun operations, although some growers in the region are leaving the sugar beets in the ground for a little longer to allow the sugar content to develop further as poor sunshine this summer has hampered sucrose development. In the UK meanwhile, the new campaign is off to a rocky start with many growers also deciding to leave the crop in the ground for longer, and remaining stocks are at critical levels. Additionally, the ongoing shortages of HGV drivers and diesel have resulted in many failed deliveries. This threatens to have a knock-on impact on availability if it carries on, with sources braced for a challenging next few weeks.
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Thanks for kicking off your Monday with us and have a great week ahead!