Monday's crunch OPEC meeting dominates this week's Market Movers, as well as a meeting with non-OPEC partners taking place Tuesday. Elsewhere, Dutch gas production cuts could be expedited, and today marks the start of the new grains marketing year. Karishma Bhimani summarizes your week ahead.
In this week's Market Movers, shipping markets wait for possible hikes in freight rates, Dutch gas production cuts could be expedited, and today marks the start of the new grains marketing year.
This week is all about today's OPEC meeting in Vienna, and tomorrow's expanded meeting with non-OPEC partners, led by Russia.
Top of the agenda is whether to extend or modify the group's production pact. The deal – to cut 1.2 million barrels per day of oil output – expired on Sunday.
Talks between Russian President Vladimir Putin and Saudi Crown Prince Mohammad Bin Salman at the G20 summit in Japan have set the tone for this week's meetings in Vienna.
Ministers from the two largest countries of the producer alliance have endorsed a nine-month extension of the accord, which expired this weekend. Saudi Arabia and other OPEC members meet today in Vienna to discuss its options, with any agreement requiring a unanimous vote.
On Tuesday, Russia and nine other non-OPEC partners will also join the talks.
You can expect blow-by-blow coverage from our team on the ground in Vienna, as well as quality analysis.
International talks are not only affecting the oil markets. Shipping markets will be keeping a close eye on any changes in trade tensions between the US and China arising from the G20 summit. If China chooses to remove its 25% tariff on US-sourced soybeans, North Pacific dry bulk round-voyage rates are expected to jump significantly as exports increase. However, hopes aren't high for a turnaround in the global container shipping markets after US President Donald Trump on Friday denied promising a six-month reprieve on imposing new tariffs on $300 billion worth of Chinese imports.
Moving from shipping to the gas and power markets, the Dutch Council of State on Wednesday will rule on appeals against the government's production policy at the giant onshore Groningen gas field. A production cap has been in place for a number of years to limit the impact of earthquakes linked to gas production at Groningen.
The chart on your screen gives you an idea of exactly what kind of impact that's had.
A number of plaintiffs in April called on the court to rule in favor of speeding up the end of production at Groningen. That could provide support to the otherwise bearish outlook for European gas prices. The 26 appeals were heard before a 3.4 magnitude earthquake hit a northern village close to the Groningen field in mid-May, which triggered new calls for the phase-out of Groningen production to be accelerated.
This leads us to our social media question this week: What impact will a reduction or halt in Groningen production have on power prices? Tweet us your views using the hashtag #PlattsMM.
Finally, today marks the start of the grains marketing year in the EU and Black Sea region. Platts Analytics forecasts total EU wheat production in 2019-20 at a little over 150 million metric tonnes. Within that, Ukraine and Russia would be at about 27 and 79 million tonnes, respectively.
Recent heat waves in June and potential extreme weather events in July could still draw down wheat production – but a substantial decrease is unlikely. As the winter wheat harvesting campaign began recently in Europe and the Black Sea, unfavorable weather is most likely to affect quality rather than quantity.
That's not the case for spring wheat, which is contributing almost 21 million tonnes to total wheat production in Russia.
You can see that in the context of Russia's overall production in the chart on your screen.
If there is low to no impact on spring wheat, total production in Russia will be the second-highest after the record of 2017/18. With this, Platts Analytics still expects Russia to remain the world's leading wheat exporter in the coming year.
Thanks for kicking off your Monday with us and have a great week ahead.