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Market Movers Europe, Nov 18-22: Russia-Ukraine gas transit deal on the line, as winter hits European power sector

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French nuclear dips on outage, Cruas return brought forward

Watch: Market Movers Europe, Nov 18-22: Russia-Ukraine gas transit deal on the line, as winter hits European power sector

In this week's highlights, we look at major energy meetings involving Russia, the outlook for French power demand this winter, along with the expected return of two major European petrochemical facilities.

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In this week's highlights, we look at major energy meetings involving Russia, the outlook for French power demand this winter, along with the expected return of two major European petrochemical facilities.

In European gas, technical talks between Russia, Ukraine and the European Commission are set to take place this week to hammer out possible new terms for gas transit for 2020 and beyond.

But no date has yet been set for a new round of ministerial-level talks after the last meeting at the end of October ended in deadlock.

With only six weeks to go before the end of the year, the pressure is on to reach a deal, and the market will be watching the outcome closely.

The European Commission is worried that without a deal Russian gas supplies to the EU via Ukraine could be disrupted from January the 1st.

As the chart shows, Ukraine is Russia's biggest single transit route to the EU, carrying over 40% of Russian supplies in 2018, and heading for a similar share this year.

Russia's Gazprom is sticking firmly to its long-standing position that all outstanding legal issues with Ukraine's Naftogaz must be settled before a new transit deal can be signed.

But Naftogaz has said it would press on with its legal challenges against Gazprom regardless.

This is one of the key sticking points in the negotiations.

In other areas, Russia will be on a charm offensive.

President Vladimir Putin and energy minister Alexander Novak will host the Russia Calling investment forum in Moscow.

The talks are part of a pattern of Russia continuing to improve ties with countries to which it hasn't historically been particularly close, especially in the Middle East.

Novak will co-chair a meeting with counterparts from Qatar, which is likely to revolve around cooperation in the oil and gas sector.

Qatar has taken on added importance for Moscow despite withdrawing from OPEC-led production cuts as its Investment Authority stepped in to buy 19% of Russia's biggest oil producer, Rosneft, last year.

The Middle Eastern delegates may find the reception warm but the weather chilly in Moscow at this time of year.

And the seasonal chill will be on the power market's mind, when French electricity system operator RTE issues its Winter Outlook this week as the country's dominant nuclear generator, EDF, struggles to get its reactor fleet into shape ahead of the peak demand season.

An earthquake last week in the Rhone Valley took EDF's huge Cruas nuclear plant out of service, removing around 5% of France's generating capacity at a time when nuclear availability needs to be ramping up and 13 other reactors are offline for maintenance.

EDF plans to bring the four Cruas reactors back through the first half of December.

However, with restart clearances prone to bureaucratic delay, any volatility in prompt prices could intensify as winter deepens.

France has the highest proportion of electric heating in Europe.

For every 1 degree Celsius fall in temperatures below the winter average, French power demand ratchets up 2.2 GW, roughly equivalent to the output of two nuclear reactors.

An economic chill is blowing through the European steel industry.

A weather check will come on Thursday when ThyssenKrupp publishes its third-quarter results.

Sluggish European demand and high imports have been weighing on the sector so far this year.

ThyssenKrupp's results come on the heels of a management reshuffle and the introduction of a new strategic plan after the European Commission blocked its planned merger with Tata Steel earlier this year.

An update is expected on the planned IPO of the German steelmaker's more lucrative elevators division, as well as the plan to cut costs in its steelmaking division.

And finally, oversupply and weak demand will feature in the styrene market this week as two major European production facilities are set to come back on line.

The Maasvlakte and the Ellba Moerdijk facilities will restart following maintenance that began in September.

The added volumes are expected to put downward pressure on the market as stocks in Europe are already unseasonably high due to lackluster end-user demand for styrene products, from the automotive and construction sectors in particular.

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