European natural gas soared as traders focused on negotiations over potential worker strikes at facilities in Australia, a move that could disrupt the global market for the fuel.
(Bloomberg) — European natural gas soared as traders focused on negotiations over potential worker strikes at facilities in Australia, a move that could disrupt the global market for the fuel.
Benchmark futures rose as much as 7% after settling at a two-month high in the previous session.
Woodside Energy Group Ltd. on Wednesday is expected to continue discussions with workers and unions who have threatened walkouts at its North West Shelf liquefied natural gas export facility. Industrial action could begin as soon as Sept. 2 if no deal is reached.
“Our objective with workers is to come to an enterprise agreement,” Woodside Chief Executive Officer Meg O’Neill said in a Bloomberg TV interview. “We are making good progress by engaging constructively.”
Read more: Strikes Latest Threat to Fragile Gas Market, Woodside CEO Says
Potential strikes risk interrupting as much as 10% of global supplies while Asia and Europe prepare for the winter heating season. Both regions vie for a limited amount of LNG worldwide. Workers at some Chevron Corp. facilities in Australia are also considering strikes.
While the possibility of industrial action has lifted futures in recent days, the impact of any such event depends largely on its duration. The avoidance of walkouts could also trigger volatility.
“If the labor strike is not decided or if production is not disrupted, the market would be so significantly oversupplied with gas and LNG that prices would have to fall ahead of November,” Citigroup Inc. analysts wrote in a note.
Prices are still far below the highs of last year’s energy crisis, and Europe’s gas inventories are at record levels for the season, providing a buffer in the early months of the heating season, which begins in October.
Dutch front-month futures, Europe’s gas benchmark, rose 5.8% to €43.15 a megawatt-hour by 1:13 p.m. in Amsterdam. The UK equivalent advanced 4.4%.
–With assistance from Anna Shiryaevskaya, Stephen Stapczynski and Manus Cranny.
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