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Market Movers Europe, Jun 15-19: OPEC+ monitors oil demand recovery as trade flows remain in focus

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Watch: Market Movers Europe, Jun 15-19: OPEC+ monitors oil demand recovery as trade flows remain in focus

In this week's highlights: OPEC+ expects to meet again for further output cuts; European power markets will look for signs of demand recovery; the European gas market will be eying Ukrainian storage use; and the EU is expected to make a key announcement on steel trade policy.

Platts Live

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In this week's highlights: European power markets will look for signs of demand recovery; the European gas market will be eying Ukrainian storage use; and the EU is expected to make a key announcement on steel trade policy.

But first, the oil markets will be keeping an eye on the pace of demand recovery following April's shock collapse, estimated at over 20 million barrels a day.

The 23-nation OPEC-plus producer group, fresh from a June 6 accord on extending production cuts of 9.7 million b/d into July, expects to hold another meeting on further cuts in just a few weeks' time. A preparatory ministerial monitoring meeting takes place this Thursday.

Providing insights into the recovery will be the IEA's monthly oil market report, due Tuesday, and OPEC's own report, on Wednesday.

In addition, BP will be giving its view on trends across all energy markets when it publishes its annual Statistical Review on Wednesday.

And that takes us to our social media question for the week: What do you think the shape of the oil demand recovery will be? Tweet us your thoughts using the hashtag #PlattsMM.

Russia, meanwhile, one of the key instigators of the emergency cuts, is taking steps to protect its industry, and should unveil stimulus measures on Monday. Tax support for fuel oil production is being considered, as is support for the oil field services sector. Energy minister Alexander Novak will share his thoughts on Wednesday during a World Energy Council Webinar on the coronavirus crisis.

Another market keeping its finger firmly on the pulse of demand will be European electricity. Traders are watching to see if working-day spot prices stabilize at the higher levels hit in early June, supported by a nuclear deficit in France.

With hydro stocks at a 10-year high, upside is probably limited. However, demand is creeping back up towards normality. French system operator RTE puts current demand at around 7% less than normal. That compares with up to 20% less at the height of the coronavirus crisis.

The Nordic region, though, has been untouched by the current uptick in price, as you can see from the chart on your screen.

A late, plentiful snowmelt season has prompted a record run of low Norwegian spot prices. With increased precipitation forecast for this week, the signs remain bearish.

Turning to another over supplied market, Russia's Gazprom Export has been making record high gas sales on its Electronic Sales Platform so far in June.

A large amount of the gas sold in recent weeks is for delivery into Slovakia in the third quarter. This suggests market participants are securing Russian gas volumes for delivery to the Slovakian virtual trading point with a view to then sending it to Ukraine for storage. Ukraine has around 13 billion cubic meters of spare storage capacity. It has made it easier and cheaper for European traders to store gas there instead of quickly filling storage sites elsewhere in Europe.

The European gas market remains oversupplied despite a fall in LNG supplies and Norwegian exports. This means Ukraine is now seen as an overflow for European gas storage. This could help prevent a further drop in prices in the coming months.

Finally, sticking with imports, this week, the European Commission is expected to announce the results of a review of its steel safeguards system. This was formally introduced in February 2019 to stem a flood of imports. Following approval by a majority of member states June 12, the review is expected to be passed and includes changes that are likely to tighten steel imports further. This should support domestic demand and prices as EU buyers will have to turn to the bloc's producers. Criticism of the review has come from downstream steel users who may incur higher costs as a result. Italian trade body Assofermet said the changes would be detrimental to importers and that the EU would be protecting steel producers at the expense of steel-consuming industries' competitiveness.

There may be further reaction to this when World Steel Association Director General Edwin Basson speaks with Platts this week about the sector. The industry group's short-range outlook in June cut its forecast for global steel demand in 2020 due to the coronavirus.

For more on all the issues affecting commodity markets, please check out Platts Live, a new section of our website that has been created for our customers to continue engaging with us, and each other. You can find it at the address displayed on your screen.

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