Gas futures prices in Europe fell by as much as 18 percent as Australia’s anti-strike talks reached the final stage. The market’s attention was turned to negotiations between the Woodside company and workers in Australia.
Natural gas prices in Europe slumped as Australian LNG facilities entered the final phase of talks to prevent their workers from going on strike.
The decline in futures gas transactions fell by 11 percent, recovering some of its losses after a decline of up to 18 percent. Although there is still no update on which direction the talks will take, investors are taking positions as the talks in Perth, Australia, continue until late at night.
Prices Hit Their Highest Level Since April On Tuesday
The risk of disruption in Australia’s LNG exports, one of the world’s largest producers, caused Asian and European prices to rise, while prices reached their highest level since April on Tuesday.
It is estimated that strikes at facilities owned by Woodside Energy and Chevron could put 10 percent of global LNG supply at risk, but some investors think recent price movements are exaggerated.
Woodside Energy reported on Wednesday that there are no updates to report. Officials and company representatives representing workers at the company’s North West Shelf LNG facility will meet in Perth, and strikes could begin from September 2 if there is no progress.
Chevron Workers May Also Decide To Strike
Alongside Woodside workers, workers at some Chevron plants are considering layoffs, but these plans are on a different timeline. In Europe, prices are well below last winter’s levels and inventories are almost full, but the market remains tense after the supply shock after Russia’s invasion of Ukraine last year.
Funds surged this month the strongest since the first weeks of the occupation, increasing their net long positions late last week, data released by Intercontinental Exchange on Wednesday showed. This means that any drop in prices may lead to a new wave of sales.
Recent Price Movements Are Exaggerated
On the other hand, some names in the sector think that the recent movements are exaggerated, even if the strikes continue.
Zoe Yujnovich, Head of Shell Integrated Gas and Production Operations, told reporters on Wednesday that there was a “global overreaction” to the possible strikes and that North Asian LNG stocks were “pretty high”.
According to BloombergNEF, LNG exports from the US, the main supplier of LNG, are currently more profitable for Europe than for Asia in October, November and December. It is evaluated that this situation may alleviate supply concerns by encouraging flows towards Europe instead of Asia. Dutch pre-month futures contracts, which are accepted as the benchmark gas measure in Europe, fell by 11.4% to 38 euros per megawatt-hour.
August 23: The first important date in the timeline to be considered for the developments in Australia stands out as August 23. If disagreements between Woodside and the unions were not resolved on that date, the workers informed the company that it was unanimously decided to take industrial action on staff.
Deductions can begin as early as September 2 when seven business days’ notice is required before the strike. August 24: Voting for workers at Chevron’s Gorgon and Wheatstone is expected to close at 3 p.m. local time.
August 28: Wheatstone Platform Staff Voting Is Expected To Be Completed
September 2: Industrial action could begin in the North West area of Woodside if the disputes are not resolved by talks on August 23.