European natural gas prices plunged as talks aimed at heading off strikes at Australian LNG facilities left markets on edge, according to Bloomberg.
Benchmark futures settled 14% lower after plummeting as much as 18%. There was still no update on the outcome of the talks by midnight in Perth, according to a spokesperson for Woodside Energy Group Ltd. Workers at one of its facilities previously said they would take strike action as early as Sept. 2 in the absence of a deal by the end of Wednesday.
The risk of disruptions to LNG exports from Australia, one of the world’s biggest producers, has sent Asian and European prices surging this month with prices settling on Tuesday at their highest since April. While the strikes at facilities owned by Woodside and Chevron Corp. could put as much as 10% of global LNG supply at risk, some traders consider the recent price moves overdone.
While European prices are well below the levels of last winter, and stocks are nearly full, the region remains vulnerable to sudden shifts in output that could raise competition for fuel with Asia.
Offshore Alliance, a group representing two major labor unions, didn’t respond on the progress or outcome of the talks by the end of the day. Separately, staff at some Chevron facilities are also considering walkouts
There’s been an “overreaction globally” to possible strikes, and North Asian LNG inventories are “quite high,” Zoe Yujnovich, head of Shell Plc’s integrated gas and upstream business, told reporters Wednesday.
LNG exports from the US — a key provider of the super-chilled fuel — are currently more profitable to Europe than to Asia in October, November and December, according to BloombergNEF. That should encourage flows to head to Europe rather than Asia, easing supply concerns.
Dutch front-month futures, Europe’s gas benchmark, settled at €38.786 a megawatt-hour.