In this week's Market Movers Europe with Daria Dabiri:
- OPEC+ 'precautionary' oil output cut
- Bonn climate talk hopes for Article 6.4
- Seeking signs of power demand recovery
In oil, the market is weighing an aggressive OPEC+ production cut announced over the weekend, including an extra 1 million b/d cut by Saudi Arabia for July.
The weekend meeting in Vienna deepened quota cuts for July to 4.7 million barrels per day -- around 5% of global supply -- and extended existing cuts to the end of 2024.
Saudi Energy Minister Prince Abdulaziz bin Salman brushed aside warnings that further cuts would damage market confidence, and described the measures as "precautionary," as the group awaits further clarity on the market.
Carbon markets come into focus this week as climate leaders gather in Germany for the Bonn Climate Change Conference from June 5-15.
Important details on Article 6.4 of the Paris Agreement are still to be ironed out, in particular the ability of companies to sell domestic credits to companies in other countries.
The voluntary carbon market is hoping that the UN Supervisory Body in charge of this key trading mechanism will be able to agree on technical aspects and next steps.
European power market players continue to watch for any signs of a recovery in demand after power prices in core markets started June at their lowest level in almost two years.
Gas-for-power demand was down 23% year-on-year in major European markets in May, driven by lower electricity consumption and high renewable energy generation.
However, despite falling prices, demand remains weak, with market consensus tending towards permanent demand destruction rather than a temporary blip.
I’m Daria Dabiri, thank you for kicking off your Monday with S&P Global Commodity Insights.