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Watch: Market Movers Europe, Dec 10-14: Energy market braces for Brexit vote

Since recording this week's edition, UK Prime Minister Theresa May announced she would delay Tuesday's planned vote on her Brexit proposal.

In this week's Market Movers: Sugar producers are worried about souring trade relations; the oil market digests the impact of last week's OPEC plus meeting; and commodity traders eye rising water levels on the Rhine.

First off, energy markets will be watching the outcome of this Tuesday's vote on UK Prime Minister Theresa May's EU withdrawal agreement.

For power, gas and carbon markets, extended uncertainty flowing from this week's vote would maintain pressure on the pound against dollar- or euro-denominated fuels, as well as emissions allowances, which are denominated in euros.

EU sugar exporters are hoping for a free trade agreement between the EU and the UK. In the event of a hard Brexit, it won't be possible to offset the loss of sugar exports by exporting the sweetener in the form of confectionery.

What impact do you think the Brexit deal vote will have on commodity markets? Tweet us your thoughts with the hashtag #PlattsMM.

In oil, the market will be weighing up the aftermath of last week's fraught meeting of the OPEC/non-OPEC production pact, looking for market direction.

Meanwhile, low Rhine water levels have hampered logistics not only for oil products, but for the whole commodity complex. Now, rainfall and rising water levels are easing the situation.

Turning to European power markets, testing starts this week on the 1 gigawatt Nemo subsea cable between the UK and Belgium. Full operation is due during the first quarter of 2019.

And finally, the European steel industry will by eying the UN Climate Change Conference as it goes into its second week in the Polish city of Katowice.

View Full Transcript

In this week's highlights: sugar producers are worried about souring trade relations; the oil market digests the impact of last week's OPEC plus meeting; and commodity traders eye rising water levels on the Rhine.

But first, energy markets will be watching the outcome of this Tuesday's vote on UK Prime Minister Theresa May's EU withdrawal agreement.

For power, gas and carbon markets, extended uncertainty flowing from this week's vote would maintain pressure on the pound against dollar- or euro-denominated fuels, as well as emissions allowances, which are denominated in euros.

The UK parliament is broadly expected to reject May's deal with the EU in its current form.

UK consumer price inflation rose sharply after the referendum vote to leave the EU and has been consistently above 2.2% since, with rising fuel prices playing a major role. This is before factoring in the impact of a no-deal exit, which would cause problems for the Northern Irish power market, which relies on the Republic of Ireland for imports.

Meanwhile should parliament approve the deal it could spur a carbon price rally. This is because it would activate an informal transition deal, which would mean the UK staying in the emissions trading scheme until the end of 2020. That would maintain demand for carbon allowances from UK emitters.

On the other hand, if the deal is voted down it raises the possibility of the UK crashing out of the EU without a deal. This is causing concern among the remaining EU member states that traditionally export sugar to the UK, mainly France, but also the Netherlands and Belgium. The UK is a net importer of sugar.

EU sugar exporters are hoping for a free trade agreement between the EU and the UK. In the event of a hard Brexit, it won't be possible to offset the loss of sugar exports by exporting the sweetener in the form of confectionery.

That brings us to our social media question this week: What impact do you think the Brexit deal vote will have on commodity markets? Tweet us your thoughts with the hashtag #PlattsMM.

Talking of tough negotiations, the oil market will be weighing up the aftermath of last week's fraught meeting of the OPEC/non-OPEC production pact, looking for market direction.

The International Energy Agency, which largely represents oil-consuming countries, will give its assessment of OPEC and its allies' agreement to cut 1.2 million barrels a day of production in its monthly oil market report on Thursday. The agency's figures on global oil demand, and any revision to its recent low-key estimates, will be particularly closely watched.

And on Wednesday, OPEC publishes its own monthly oil market report.

Once oil and oil products have been produced, they have to be transported. Low Rhine water levels have hampered logistics not only for oil products, but for the whole commodity complex. Now, rainfall and rising water levels are easing the situation.

As you can see, water levels have now risen from near-record lows at the end of November to above 150 centimeters at choke-point Kaub. This is seen as a critical level for loading barges comfortably.

Barge rates have started falling from exceptionally high levels.

The easing Rhine situation is also expected to free up rail and trucks for ethanol and biodiesel as well as biodiesel feedstock rapeseed to be transported from inland Europe to the ports. Prices of these commodities have rallied as a result of the transport logjam and market participants expect them to fall back as the situation starts to normalize.

However the situation could still be problematic for petrochemical markets as they face competition for barges from LPG and fuel oil. This, combined with reduced run rates for aromatics and olefins, could result in an unseasonal run-up in prices as stocks drop.

As barges resume connecting products with consumers, another link will be in the news. Testing starts this week on the 1 gigawatt Nemo subsea cable between the UK and Belgium. Full operation is due during the first quarter of 2019.

The interconnector is sorely needed as only two of Belgium's seven nuclear reactors are operating at present.

And finally, the European steel industry will by eying the UN Climate Change Conference as it goes into its second week in the Polish city of Katowice.

There, attention will focus on how Europe's steel and metals sectors are shaping up in the climate change stakes after a sharp increase in emissions in 2018.

European steelmakers' association Eurofer points to the difficulties in implementing high-cost low-carbon steelmaking in a global industry without a level playing field.

It stresses the EU already imports over 26 million metric tons of steel a year from countries without comparable climate policies.

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