European natural gas prices eased as traders await the outcome of crucial negotiations to avoid strikes at Australia’s biggest export facility for the fuel.
(Bloomberg) — European natural gas prices eased as traders await the outcome of crucial negotiations to avoid strikes at Australia’s biggest export facility for the fuel.
Benchmark futures dropped as much as 4.1% before paring the loss. The contract settled on Tuesday at the highest level since April, with tensions running high in recent days over the possibility of walkouts.
Discussions between Woodside Energy Group Ltd. and officials representing workers at its North West Shelf LNG facility are ongoing in Perth and could run well into the evening. If there’s no progress, strikes could begin as early as Sept. 2.
Separately, staff at some Chevron Corp. facilities are also considering walkouts. The possibility of industrial action in Australia risks disrupting as much as 10% of global liquefied natural gas supplies, just as Asia and Europe prepare for the winter heating season.
Read more: LNG Strikes in Australia Loom If No Progress in Talks Wednesday
“Any news will cause price spikes,” Dominic Gallagher, head of LNG broking at Tullett Prebon, said in an interview. “It is going to be led by market developments, because Europe is still pretty tight.”
A reduction in flows from top-exporter Norway, after works at the giant Troll field were extended, is also contributing to the tight European market. LNG exports from the US are currently more profitable to Europe than to Asia in October, November and December, according to BloombergNEF.
Still, European gas prices are far below the highs of last year’s energy crisis. The region’s storage facilities are at record levels for the season, providing a cushion ahead of the upcoming heating season.
Dutch front-month futures, Europe’s gas benchmark, fell 0.4% to €42.76 a megawatt-hour by 8:42 a.m. in Amsterdam.
–With assistance from Anna Shiryaevskaya.
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