European natural gas prices rebounded on Friday, trimming their first weekly drop this month, with traders weighing further labor talks in Australia and heavy maintenance in Norway.
(Bloomberg) — European natural gas prices rebounded on Friday, trimming their first weekly drop this month, with traders weighing further labor talks in Australia and heavy maintenance in Norway.
Benchmark futures jumped as much as 7.2% after two days of sharps declines. Even though a key Australian exporter, Woodside Energy Group Ltd, moved closer to a final deal with its workers, talks between Chevron Corp. and its staff are ongoing, keeping some pressure in an already volatile market.
In addition, flows from Norway — Europe’s top gas provider — slumped to the lowest in two months as capacity reductions deepened at the giant Troll field amid seasonal maintenance. The facility is set to halt supplies completely from Saturday to Sept. 7 — together with the major Kollsnes processing plant — and any extensions to those works could push prices higher.
While Europe is well stocked and overall demand for gas remains subdued, the recent price rally reflects lingering market jitters after the worst energy crisis in decades. Woodside and Chevron’s three facilities impacted by labor disputes cover about 10% of global liquefied natural gas capacity, and strike risks at those plants could mark a significant disruption.
“The European market is over-supplied until possible cold weather arrives,” said Jonathan Stern, distinguished research fellow at the Oxford Institute for Energy Studies. “But this kind of ‘rumor volatility’ seems likely to be with us for at least another year.”
There could be a “technical rebound” in European gas on Friday as potential risks for Australian plants operated by Chevron still remain, analysts at Engie SA’s EnergyScan said in a note. Yet, the market nervousness seems to have eased after an in-principle agreement between Woodside and its workers, they said. The pact, endorsed by unions, should be finalized by the end of next week.
If strikes in Australia had occurred, disruptions could have forced Asian buyers to compete with Europe for replacement cargoes from the US or Qatar. The region needs a continuous flow of LNG after losing most pipeline flows from Russia last year.
Dutch front-month futures, Europe’s gas benchmark, traded 7.0% higher at €34.16 a megawatt-hour by 11:05 a.m. in Amsterdam. The UK equivalent contract was up 6.9%. Both still headed for a weekly drop.
–With assistance from Stephen Stapczynski.
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