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Market Movers, Nov 5-9: Markets await word on waivers as Iran sanctions kick in; gas, carbon prices tumble

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Watch: Market Movers, Nov 5-9: Markets await word on waivers as Iran sanctions kick in; gas, carbon prices tumble

The US has re-imposed sanctions on Iran, and granted waivers to some countries at the end of last week. The market will be looking to see precisely which countries have been exempted and on what terms. Platts survey of OPEC production, due out this week, will provide a steer on how Iran's fellow OPEC exporters are reacting.

Key ministers from OPEC and its non-OPEC allies in a production pact will gather in Abu Dhabi later this week. Comments from members of the Joint Ministerial Monitoring Committee on the state of the oil market will be closely watched.

Gas traders will be watching the outlook for LNG imports and send-out into European gas grids. Robust LNG supply combined with mild weather and easing concerns about storages levels have caused a drop in European gas prices.

Falling gas prices also had a knock-on effect in the European carbon emissions market, helping to push carbon allowance prices sharply down from a recent 10-year high in September.

View Full Transcript

In this week's market movers, Africa Oil Week kicks off in Cape Town; European gas prices tumble on strong LNG imports; and where will the carbon market will go after a sharp sell-off from the 10-year highs it hit in September?

But first, in oil news, as the working week resumes on Monday so do US sanctions against Iran. These are likely to hit Iran's oil exports hard. Platts Analytics expects crude and condensate exports to drop by at least half compared with May when the Trump Administration announced it would re-impose sanctions.

The US granted waivers to some countries at the end of last week, but Secretary of State Mike Pompeo did not name them. The market will be looking to see precisely which countries have been exempted and on what terms. Platts survey of OPEC production, due out this week, will provide a steer on how Iran's fellow OPEC exporters are reacting.

Among those likely to react to the Iran situation are ministers and officials gathering Monday in Cape Town for Africa Oil Week. These include Nigerian oil minister Emmanuel Kachikwu and International Energy Agency executive director Fatih Birol.

That brings us to our social media question of the week: What effect do you think the US waivers will have on the oil market? Tweet us your thoughts with the hashtag #PlattsMM.

The oil market's week will be book-ended by another important meeting. At the weekend, key ministers from OPEC and its non-OPEC allies in a production pact will gather in Abu Dhabi. Members of the Joint Ministerial Monitoring Committee include Saudi energy minister Khalid Al-Falih and his Russian counterpart, Alexander Novak, whose comments on the state of the oil market will be closely watched.

All this plays out against a backdrop of US mid-term elections on Tuesday, which will set the tone for the US economy, the US shale industry, global trade and much else.

Back in Europe, gas traders will be watching the outlook for LNG imports and send-out into European gas grids. Robust LNG supply combined with mild weather and easing concerns about storages levels have caused a drop in European gas prices.

This week, 17 LNG cargoes are expected to arrive at European regasification terminals, carrying about 1.7 billion cubic meters of gas or more than 15% of weekly European gas demand.

However, netback economics indicate that the flood of LNG should ease in December as the European gas price premium falls by more than a dollar per million British thermal units from November, making it much less lucrative to export US Gulf Coast LNG to Europe than to Asia.

Those falling gas prices also had a knock-on effect in the European carbon emissions market, helping to push carbon allowance prices sharply down from a recent 10-year high in September. Prices have fallen 10 euros in just over a month to around 16 euros a metric ton.

Burning gas to generate electricity produces less carbon dioxide than burning coal. A lower gas price means utilities favor it over coal. This in turn reduces hedging demand for carbon in the forward market. Traders will be watching closely this week to see if carbon prices stabilize or rebound after the recent sharp sell-off.

That's it for this week. Thanks for kicking off your Monday with us and have a great week ahead.