In this week's highlights: Oil markets keep an eye on road fuel consumption, the European gas market remains focused on supply issues, with Nord Stream 2's progress still dominating the backdrop, while petrochemical markets are grappling with a shortage of methanol supply.
- Concerns over lower gasoline consumption in the US (0:12)
- European Gas market keeps focus on Russia (1:07)
- Tight methanol supplies seen across Europe (2:33)
In this week's highlights: The European gas market remains focused on supply issues, with Nord Stream 2's progress still dominating the backdrop, while petrochemical markets are grappling with a shortage of methanol supply.
But first, to oil, where after last week's slide in prices market watchers - and especially the OPEC+ producer group - are contemplating a much more mixed picture than they were at the start of the month.
Whereas then, all the talk was of resurgent activity in the OECD countries on the back of a vaccine-led recovery, now a slowdown in US mobility and gasoline consumption - underlined by the surprise build in US gasoline stocks reported last week - is, amongst other things, denting the optimism.
This all comes just as OPEC+ is preparing for its next meeting on September 1, to check in on progress with its easing of production cuts. The last meeting was turbulent and ended up with a decision that some may now be questioning. It's possible no major decision will be taken, but softer demand levels make it easier for Saudi Arabia, the diplomatic enforcer of the group, to keep everyone on board with their quotas.
In European gas, the near-term outlook for market fundamentals continues to be driven by news surrounding Russia, following a drop in gas flows via the Yamal pipeline, and ongoing uncertainty overflows via Ukraine. Right at the end of last week President Vladimir Putin said that Russia was ready to continue supplying gas to Europe via Ukraine after 2024, but that Moscow needed clarity on future European gas demand before agreeing to any new transit deal.
With the second string of the controversial Nord Stream 2 gas pipeline set to be completed any day now, attention has shifted towards regulatory issues, as the operator waits to find out if its certification as a gas system operator is successful. And on August 25, a German court is to rule on an appeal brought by Nord Stream 2 against the decision of the German regulator not to give it an exemption from the rules of the amended EU Gas Directive.
Spot gas prices, which have been riding high lately, slumped last week in the wake of Russia saying that about 5.6 billion cubic meters of Russian gas could flow through the Nord Stream 2 pipeline to Germany this year. That had a knock-on effect on EU carbon allowance prices, which fell sharply as the August price rally went into reverse.
And that takes us to our social media question for the week: Does the imminent startup of Nord Stream 2 signal a decisive change in direction for European gas? Tweet us your thoughts using the hashtag #PlattsMM.
Finally, in the petrochemical markets, tight methanol supplies left market participants scrambling for product last week. In the week to come, participants will be looking for any updates on maintenance works taking place in Europe and for signs of imports heading to the region to reduce supply-side pressure on the market.
The Platts Atlas of Energy Transition is your map to the sustainable commodity markets of the future. You can explore the Atlas by visiting the address displayed on your screen.
Thanks for kicking off your Monday with us and have a great week ahead!