European and UK wholesale gas markets saw a decline to the start of the week as comfortable supply-demand fundamentals weighed on prices. Storage facilities have been steadily increasing which are now over 51% full, helping ease some concerns over supplies for next winter. That’s happening even as Norway undergoes seasonal maintenance, which has curbed flows in recent weeks. However, we have seen some of those losses being reversed today as rising power prices amid French nuclear concerns and warmer weather increasing demand has supported prices.
French newspaper La Tribune on Tuesday reported that nuclear watchdog ASNR had identified “hints” of stress corrosion at the Civaux 2 reactor run by EDF. EDF had dealt with stress corrosion cracks in the same reactor less than three years ago, when corrosion in multiple reactors nationwide forced nuclear output in France to a 34-year low and sent prices skyrocketing. A spokesperson for EDF said an inspection was underway at Civaux 2 as part of annual maintenance although ASNR was not available for comments.
In other news the European Commission announced its 18th round of sanctions against Russia yesterday, targeting Moscow’s energy revenues, its banks and its military industry. “For the first time, we propose a transaction ban for Nord Stream 1 and Nord Stream 2. This means that no EU operator will be able to engage directly or indirectly in any transactions regarding the Nord Stream pipelines. There is no return to the past”, Von der Leyen said. She had already noted the commission’s desire to impose sanctions on Nord Stream 1 and 2 on 16 May, but these measures did not end up being included in the 17th package of sanctions later adopted on 20 May. In addition, the Commission has also proposed lowering the G7’s price cap on Russian crude oil to $45 a barrel, from $60 a barrel, to cut Russia’s energy revenues. Today, Prime Minister Robert Fico said Slovakia will not back the EU’s 18th package of sanctions against Russia unless the European Commission provides a solution to the situation the country faces if the bloc phases out Russian energy as planned. EU countries will start debating the sanctions proposals this week, which require unanimity in the bloc for approval.
Elsewhere the market has also been following the latest developments in talks between the US and China and the impact they will have on global energy demand. Earlier today U.S. President Donald Trump said a deal had been done with China, heightening expectations of a de-escalation in trade tensions between the world’s two largest economies. Oil prices rose to their highest in seven weeks following this news.
