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Watch: Market Movers Europe, Nov 20-24: Major energy meetings involving Russia, German coalition talks fail

Oil prices are likely to stay volatile as the countdown to the OPEC/non-OPEC meeting on November 30 begins, with Russia's energy minister Alexander Novak to continue consultations with the country's key oil companies on the government's approach to output cuts in 2018.


In Germany, talks to form a new unprecedented four-party coalition government have failed after the pro-business FDP walked out of the talks with Chancellor Angela Merkel’s Conservatives and the Green Party eight weeks after the elections.


Meanwhile, looking more politically certain is the possibility of the UK government levying higher taxes on new diesel cars, along with increasing the diesel duty as it seeks to curb pollution.


Finally, in France power and natural gas traders will be eyeing further potential delays to French nuclear plants returning to the grid.

What surprises are in store for the energy markets in the UK autumn budget statement? You can reach out to us by tweeting with the hashtag #PlattsMM.

View Full Transcript

Video Transcript


Market Movers Europe, Nov 20-24: Major energy meetings involving Russia, German coalition talks fail; UK budget may target diesel


With Eklavya Gupte, senior editor, oil news

In this week’s highlights, we look at major energy meetings involving Russia, the UK’s autumn budget statement, along with the expected return of French nuclear capacity after lengthy outages.


Oil prices are likely to stay volatile as the countdown to the OPEC/non-OPEC meeting on November 30 begins. Most analysts expect the coalition to extend the current cuts beyond March 2018.


But Russia, whose recent production you can see in this chart, has so far been noncommittal on continuing the cuts for the full year, adding to the suspense. Russia is the world’s largest oil producer and Russian energy minister Alexander Novak will continue consultations with the country’s key oil companies on the government’s approach.


Novak is likely to conduct additional consultations with some of his OPEC counterparts at a Gas Exporting Countries Forum summit in Bolivia mid-week.


In Germany, talks to form a new unprecedented four-party coalition government have failed after the pro-business FDP walked out of the talks with Chancellor Angela Merkel’s Conservatives and the Green Party eight weeks after the elections.


Germany is now entering unchartered territory amid uncertainty about the way forward after failure to achieve a compromise with the question of coal plant closures one of the key sticking points in the negotiations in Berlin.


Europe's biggest economy is lagging behind its 2020 national climate targets, with the Greens demanding additional measures across many sectors, but with coal closures more likely than restrictions on car makers.


Looking more politically certain is the possibility of the UK government levying higher taxes on new diesel cars, along with increasing the diesel duty as it seeks to curb pollution. Any move on this front would hit diesel car sales, and in turn medium term diesel and biodiesel demand.


The statement is also likely to impact carbon pricing into the 2020s. Insiders expect a possible extension to the freeze on carbon price support beyond April 2021, perhaps for just a year. There remains a small risk that the rate could be cut to ease household bills. Also expect fresh guidance on how renewable energy costs are to be controlled.


And our question for social media this week: What surprises are in store for the energy markets in the UK autumn budget statement? Tweet us your thoughts using the hashtag #PlattsMM.


Across the Channel, power and gas traders will be eyeing further potential delays to French nuclear plants returning to the grid.


Plant operator EDF has scheduled 10 reactors to return before next Monday, a very crowded schedule. As you can see from the chart, French nuclear output has only recently come off from record lows. In order to reach production targets, the dark blue line would have to reach the top black bar by mid-December—a race against time for EDF.


Mild weather has eased pressure on the demand side, but any further delays or colder weather could trigger power price spikes and send bullish signals on French gas prices.


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