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Highlights

Oil markets eye Nigerian election result

Asian arb in focus for Atlantic crude

News awaited on steel merger asset sales

In this week's Market Movers, with Emma Kettley, associate editor, crude oil: The European steel market looks to see what assets will have to be sold off for the Thyssenkrupp-Tata Steel merger; gas and power traders are looking closely at the weather; and an icy blast hits petrochemical shipments from Russia.

But first, oil markets will be looking to Tuesday, when the results of Saturday's presidential elections in Nigeria are set to be announced.

Meanwhile, oil traders will also be watching the Brent/Dubai exchange for swaps this week, as a narrow Brent/Dubai spread is bolstering arbitrage economics for Atlantic Basin crudes to Asia.

This week's social media question is: Do you expect to see more Atlantic Basin crudes heading to Asia? Tweet us your thoughts with the hashtag #PlattsMM.

The European steel market will be looking to see which assets Thyssenkrupp and Tata Steel Europe will be required to sell off for competition reasons to be able to proceed with their planned merger.

The natural gas market will be wondering whether a prolonged period of warm weather across northwest Europe forecast for the rest of February limits heating demand.

The power markets will also be watching the elements, namely the wind, with WindEurope set to publish its annual capacity review and forecast this week.

And finally, the European petrochemicals sector will be will keeping an eye on logistical issues at the Finnish-Russian border caused by adverse weather.

Join our conversations on Twitter - use #PlattsMM and connect with us.

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View Full Transcript

In this week's Market Movers: The European steel market looks to see what assets will have to be sold off for the Thyssenkrupp-Tata Steel merger; gas and power traders are looking closely at the weather; and an icy blast hits petrochemical shipments from Russia.

But first, oil markets will be looking to Tuesday, when the results of Saturday's presidential elections in Nigeria are set to be announced. The elections come against the backdrop of the threat of renewed militancy in the oil-rich Niger Delta, many of whose residents live in abject poverty despite Nigeria's billions of dollars in oil revenues.

The country's two main presidential candidates differ in their oil sector policies. Incumbent President Muhammadu Buhari of the All Progressive Congress advocates a continuation of a largely state-controlled oil sector. Rival and former vice president Atiku Abubakar, of the opposition People's Democratic Party, is proposing large-scale privatization, along with the removal of gasoline subsidies. In the past, any attempt to raise the price of gasoline has caused popular unrest.

A more immediate concern is a resurgence in attacks on energy infrastructure in the Niger Delta if Buhari is re-elected. The Niger Delta Avengers, the militant group that claimed most of the attacks on Nigeria's oil installations in 2016, have publicly backed his opponent.

Oil traders will also be watching the Brent/Dubai exchange for swaps this week, as a narrow Brent/Dubai spread is bolstering arbitrage economics for Atlantic Basin crudes to Asia. These crudes are priced against Brent, whereas competing grades from the Middle East and Asia are priced against Dubai. The front-month EFS dropped to its lowest in 9 years last week because of Venezuelan unrest, and cuts to OPEC production, as you can see from the chart.

The big question for the market now is whether it will remain this low. There has been a pick-up in demand for March cargoes of North Sea Forties crude, and that is likely to continue if the spread remains narrow. This leads us onto our social media question: Do you expect to see more Atlantic Basin crudes heading to Asia? Tweet us with your thoughts at #PlattsMM

While oil markets are looking at what might go east, the European steel market will be looking to see which assets Thyssenkrupp and Tata Steel Europe will be required to sell off for competition reasons to be able to proceed with their planned merger. The European Commission is known to have informed Thyssenkrupp in recent days of some requirements, but these have not yet been made public. Disposals may be announced in the areas of electrical, automotive and packaging steels. The deadline for the commission's final decision on whether the merger can go ahead is April 29th. Labor union representatives say they will not approve the merger if Thyssenkrupp's approximately 27,000 steelworkers are not guaranteed continued employment.

While the EU turns up the heat on Tata and Thyssenkrupp, the gas market will be wondering whether a prolonged period of warm weather across northwest Europe forecast for the rest of February limits heating demand.

As the chart shows, the region's gas stocks are 47% higher on the year at 22 billion cubic meters, according to S&P Global Platts Analytics.

These stocks, robust imports from Norway and Russia, and high LNG deliveries, could further pile pressure on the Summer 2019 European gas contracts, which are falling more quickly than Winter 2019.

The power markets too will be watching the elements, in their case, the wind. WindEurope is set to publish its annual capacity review and forecast this week. S&P Global Platts analysis indicates the report will include details of around 20 gigawatts of additions this year, led by Germany, Spain, Sweden, the UK and France. That's a record year in prospect as costs continue to fall and corporates seek to contract directly.

Finally, staying with the meteorological theme, the European petrochemicals sector will be will keeping an eye on logistical issues at the Finnish-Russian border caused by adverse weather. Heavy snowfall and ice on railway tracks has already caused delays to shipments of petrochemicals to Northwest Europe, and this may continue to support prices of products the EU imports from Russia. These include acrylonitrile and benzene.

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