European gas prices rocket amid potential Australian gas factory strikes.
Affected by the potential strike news from Australian natural gas factories, the panic over gas returned. European natural gas prices saw a staggering 40% increase on Wednesday, marking the most significant surge since the onset of the Russia-Ukraine conflict.
However, this might just be the tip of the iceberg. Renowned energy analysts caution that this uptrend could persist in the coming months.
According to a report by CNBC on Thursday, Zongqiang Luo, a natural gas analyst at energy consultancy Rystad Energy, pointed out that the price surge mirrors the potential strike scenario in Australia. While Europe boasts ample natural gas reserves, this could further disrupt the supply of liquefied natural gas amidst an ongoing heatwave.
Luo suggested in a research report that workers from Australian energy giants Chevron and Woodside Energy might initiate the strike, leading to production halts at four liquefied natural gas facilities.
Previously, the Wall Street Journal reported that workers at Chevron and Woodside Energy facilities had voted in favor of a strike. Luo believes that such a strike could impact about half of Australia's liquefied natural gas export capacity, pushing many Asian buyers to seek alternative sources.
Looking ahead, given the reduction in Europe's liquefied natural gas imports, Norway's pipeline maintenance schedule, and ongoing heatwaves across multiple global regions, the prospect of rising gas prices seems inevitable.
PVM analyst John Evans stated that although European nations, like Germany, have forged significant gas deals with other countries, there's still a likelihood of shortages. This scenario could revert to the 2022 situation where spot market purchases were essential.
Evans further highlighted in his study that Australia currently surpasses both Qatar and the U.S. as the largest exporter of liquefied natural gas. However, due to production challenges and damage to gas fields, European buyers are concerned about supply security. To preempt winter shortages, they are increasing stockpiles from the spot market.
Amid potential supply disruptions from Australia, the September futures prices at the Dutch Energy Exchange (TTF) gas trading center reached their highest levels since mid-June on Wednesday, at times exceeding 43 euros (approximately $47.4) per megawatt-hour. The price later dropped, continuing its decline on Thursday to approximately 37.06 euros per megawatt-hour.
Meanwhile, September futures prices for natural gas on the New York Mercantile Exchange rose by 6.6% on Wednesday, closing at $2.96 per million British thermal units. This marked its best single-day performance since mid-June and its highest close since early March.
