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Market Movers Europe, Jul 27-31: Gold price hits new highs; OPEC+ countries plan to dial back cuts

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Commodity Tracker: 5 charts to watch this week

Watch: Market Movers Europe, Jul 27-31: Gold price hits new highs; OPEC+ countries plan to dial back cuts

In this week's highlights: Gold continues to be a safe haven for investors; the energy and metals markets will track results from key companies; the OPEC+ oil producer pact is set to dial back its production cuts; and European sugar beet gets a health check.

  • Will gold lose its lustre at $2,000/oz?
  • Energy majors' investment plans under scrutiny
  • OPEC+ takes foot off the brake a little
  • Net-zero, nuclear top EU power agenda
  • Will the weather be sweet or sour for EU sugar?

Platts Live

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In this week's highlights: The energy markets will track results from key companies; the OPEC+ oil producer pact is set to dial back its production cuts; and European sugar beet gets a health check.

But first, for investors looking for a safe haven in turbulent economic times it could be gold that glistens.

As the chart shows, the precious metal continues to hit new highs as the world contends with increasing coronavirus cases and ballooning government debt, leading demand from physically backed exchange traded funds to soar. As a result, speculation has grown about whether it will hit 2,000 dollars an ounce. Many are betting that level will be hit at some point in 2020. However, the charts are giving mixed messages, and some market participants say that technically, gold looks overbought.

Second-quarter results are due from a number of oil and gas majors this week, and look set to be far from golden. These will show the impact of April's market meltdown, and the difficult choices on the road to recovery in the months ahead.

Most oil and gas companies have been drastically reducing their investment plans, with several also hit by production cuts in OPEC+ countries. Household names such as BP, ExxonMobil and Shell face numerous questions, ranging from their future role in US shale, to the pace of diversification into LNG and renewables.

On Wednesday, Russian LNG pioneer Novatek reports its results, followed on Thursday by Europe's heavy-hitters: Shell, Total and Italy's Eni.

Norway-focused Lundin Energy, Austria's OMV, and Kurdistan-focused DNO will also report during the week, before results season rounds off on August 4 with BP.

The fundamentals affecting the performance of the energy sector include the unsteady recovery in mobility rates in Europe and plans by OPEC+ countries to dial back their production cuts.

The producer group led by Russia and Saudi Arabia is due to reduce its headline cut level from 9.7 million barrels a day over the last three months to 7.7 million starting Saturday, but tensions remain over some countries' compliance

The chart shows some of the countries that failed to stay within their production quotas in May and June. Iraq, Nigeria, Kazakhstan and Angola have now committed to compensating for previous overproduction with extra cuts in July, August and September.

That brings us to our social media question of the week. Will OPEC+ be able to maintain discipline in the coming months or will there be another drift into overproduction? Share your thoughts on Twitter using the hashtag #PlattsMM

In European electricity, it's also a busy week for results, with Enel, Engie and EDF all making first-half statements on Wednesday or Thursday. On Monday the UK's National Grid publishes its Future Energy Scenarios report, exploring routes to net-zero carbon emissions over the next 30 years.

Net zero is the strategic focus for all these utilities, but In EDF's case a pressing short-term issue is the company's nuclear reactor maintenance plan, and the market will be looking out for any updates. Recent improvements in availability have taken the wind out of the sails of fourth-quarter power prices which have fallen over 16% so far this month.

And finally, turning to agriculture, the European sugar market will be closely monitoring the results of the first round of beet sampling.

Market participants will be looking for clues about the impact on beet yields from virus yellows, a disease spread by aphids. A mild winter and the ban on neonicotinoid pesticides to protect bees has meant a particularly high aphid population this year.

S&P Global Platts Analytics forecasts EU-28 sugar production for the new season starting in October to be just over 1% higher on the year at 17.65 million metric tons. This is down to good weather offsetting a lower planted area.

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!