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Market Movers Europe


Market Movers Europe, Sep 18-22: European light distillates still tumbling after Hurricane Harvey

With Siobhan Hall, Senior Editor, Generating Fuels News

September 18, 2017 09:01:29 EST (3:14)

In European gasoline and naphtha, crack spreads – the product price versus crude -- could continue to drop after the dramatic post-hurricane falls of recent weeks.


Cracks for both products hit year-to-date highs on logistical problems in the US Gulf Coast after Hurricane Harvey in late August. But once these problems eased the cracks fell back to reflect balanced fundamentals.


In steel, the bellwether Turkish market for imported steel scrap looks like it could fall in the coming weeks, after bullish expectations for September were disappointed.


Meanwhile, the UK natural gas market is expecting the regulator to approve this week or next, plans to extract up to 870 million cubic meters from storage facility Rough, which has reached the end of its life.


In the carbon markets, traders will be watching closely this week to see if EU emissions allowances can hold on to their recent gains. Finally, oil ministers will gather in Vienna Friday to discuss the state of the production cut deal between OPEC and non- OPEC countries.


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Video Transcript


In this week’s highlights: European light distillates are still tumbling after Hurricane Harvey, Turkish imported steel scrap prices look set to fall, and Germans will vote in a key election for European carbon markets.


In European gasoline and naphtha, crack spreads – the product price versus crude -- could continue to drop after the dramatic post-hurricane falls of recent weeks.


Cracks for both products hit year-to-date highs on logistical problems in the US Gulf Coast after Hurricane Harvey in late August. But once these problems eased the cracks fell back to reflect balanced fundamentals.


With the US summer driving season ending and a well-covered petrochemical industry, traders will be looking to see just how low cracks can go.


And our question for social media this week: How much lower can gasoline and naphtha cracks go? Tweet us your thoughts using the hashtag #PlattsMM.


Meanwhile, a recent rise in North Sea crude has pushed medium-sweet Forties to a 24-week high over Russia’s medium sour Urals. This is likely to make some refiners favor Urals as they look to maximize yields.


Higher North Sea crudes have also helped to push ICE Brent futures into backwardation through to the end of 2018. This could encourage more withdrawals from long-term storage.


Turning to steel, the bellwether Turkish market for imported steel scrap looks like it could fall in the coming weeks, after bullish expectations for September were disappointed.


Turkish sources say offers are plentiful at around 350 to 355 dollars per metric ton CFR. The October contract on the London Metal Exchange traded lower on Friday, indicating physical prices could fall further.


In UK gas, the market is expecting the regulator to approve this week or next plans to extract up to 870 million cubic meters from storage facility Rough, which has reached the end of its life.


This expected extra supply has already pushed down UK winter gas prices, so any surprise decision to reject the plans could be bullish.


And in the carbon markets, traders will be looking this week to see if EU emissions allowances can hold on to their recent gains. Last week prices surged as high as seven euros 70 per metric ton, as EU plans to tighten supply after 2020 moved ahead.


This week is also the last week of campaigning for the German elections on Sunday. Traders will be watching closely as potential coalition partners for Angela Merkel's conservatives are polarized on energy issues, including carbon pricing.


And in oil, ministers will gather in Vienna on Friday to discuss the state of the production cut deal between OPEC and non-OPEC countries, and whether further steps will be needed at OPEC's next full meeting in November.


Finally, industry leaders will be in Brussels on Thursday and Friday for the Platts’ annual European Refining Summit. And a key topic will be how recent US hurricanes affected global product markets.


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





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