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Prices slide as Australia LNG strike action paused until Friday

PUBLISHED

2023-09-07

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Gas prices in both the Dutch and British markets took a tumble on Wednesday as workers at Chevron's liquefied natural gas (LNG) facilities in Australia decided to temporarily halt their planned strike action for one day. The pause in strike action came as negotiations continued between the workers and Chevron management.

As per data from LSEG Eikon, the Dutch October contract saw a significant drop, falling by €3.10 to €30.80 per megawatt hour (MWh) by 3.42pm GMT. Additionally, the Dutch day-ahead contract also experienced a decline of €1.40, closing at €31.40 per MWh. In the British market, the October contract slipped by 5 pence, settling at 77.50 pence per therm.

The workers at Chevron’s Wheatstone LNG platform, situated in Australia, chose to temporarily halt their strike action, with plans to resume it at 6 am Perth time on Friday, according to two union representatives who declined to be identified, as reported by Reuters.

While Australia is not a major supplier of LNG to Europe, the prospect of strike action had created concerns in British and European gas markets in recent weeks. Market participants feared that a reduction in Australian LNG shipments to Asia due to the strike could increase competition for other sources of LNG, ultimately leading to higher costs.

Analysts at Engie’s EnergyScan have noted that the news of these strikes is likely to continue to fuel intra-day price volatility in the gas markets. Chevron, on the other hand, has affirmed its commitment to working through the bargaining process with the striking workers.

In addition to the strike news, other factors have been influencing the gas market in a bearish manner. Norwegian gas production is expected to rebound significantly in the coming week following recent outages. Furthermore, Europe’s gas storage sites are currently more than 93.3% full, according to the latest data from Gas Infrastructure Europe. These factors, along with the temporary halt in strike action, have collectively contributed to the downward pressure on gas prices.

In the European carbon market, the benchmark contract also experienced a decrease, falling by €0.29 to €83.56 per tonne.

The gas market remains dynamic and sensitive to various factors, and the temporary pause in strike action in Australia has added an element of uncertainty to the pricing dynamics. Market participants will continue to closely monitor developments in the coming days.

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