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Watch: Market Movers Europe, Dec 6-10: Omicron impact hangs in balance; gas markets on edge over Russian supply

In this week's highlights: Oil markets focus on the impact of the omicron variant; Russia keeps European gas markets guessing; will carbon prices keep rising; and Germany's new government gets to work.

  • Oil market volatile on omicron uncertainty (00:09)
  • Russia keeps gas market guessing (01:09)
  • Carbon prices hit all-time high (02:00)
  • Germany's new government is to speed up transition (02:54)
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In this week's highlights: Russia keeps European gas markets guessing; will carbon prices keep rising; and Germany's new government gets to work.

But first, in oil, where the market will remain keenly focused on any news emerging about the omicron coronavirus variant and how seriously it's going to crimp mobility and scupper hopes of an aviation revival, particularly in US and Asian markets.

There have been some signs of optimism about demand, not least from OPEC+ countries with their decision last week to stick to planned output increases, but the situation remains volatile.

Several industry events take place this week, with the North Sea in focus at investor presentations by Norway-focused Lundin Energy and UK-focused Harbour Energy on Wednesday and Thursday respectively. These take place against a backdrop of rising environmental pressures, with the dropping of the Cambo oil project in UK waters by Shell last week.

And that takes us to our social media question for the week: Have Brent futures prices found a 'floor' at $70/b, after briefly falling below that? Tweet us your thoughts using the hashtag #PlattsMM.

European gas markets remain on edge given the ongoing uncertainties over Russian supply, with prices still close to record highs.

Gazprom chose not to buy monthly capacity for supplies into Germany via Poland and has instead been buying day-ahead capacity, keeping the market guessing as to how much flow to expect at the Mallnow entry point.

Withdrawals from storage have also accelerated on the back of a cold snap across most of western Europe. As you can see from this chart, storage sites are now less than 69% full -- well below the levels seen in recent years.

Without a boost in Russian supply -- which now seems unlikely for December with Gazprom booking limited day-ahead capacity at Mallnow and sticking with existing capacity via Ukraine -- there is concern that stocks could be further drawn down before 2022 even begins.

Meanwhile, carbon markets will be looking to see whether the upward momentum continues this week after prices on the EU Emissions Trading System reached another all-time high last week.

As you can see from this chart, EUAs reached 80.40 euros per metric ton of CO2 equivalent on December 3rd. That is more than three times their average price in 2020.

Tightening supply of allowances and very high natural gas prices have combined to drive carbon prices higher this year. But technical factors also came to the fore last week. A large volume of call options at a strike price of 80 euros per ton caused options sellers to panic, forcing them to buy EUA futures to cover their liabilities.

Traders will be watching to see if this factor proves temporary, with Dec 2021 EUA options on ICE set to expire on December 15th.

And in Germany, the new government is gearing up to start work, with Olaf Scholz expected to be sworn in as Chancellor on December 8th. Ministries have already been decided and there will be keen interest in how the new ‘super ministry' for energy and climate, to be headed by the Green party's co-leader Robert Habeck, develops. His in tray is full with key decisions looming, from the controversial Nord Stream 2 pipeline's final signoff to implementing ambitious energy plans aiming for a 80% share of renewables in the power mix and the phaseout coal by 2030.

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!