European gas price up almost 40% on potential strike in Australia

2023-08-10

Summary:

European natural gas prices surged almost 40% on Wednesday as the potential for disrupted global LNG supply from Australia spooked traders betting on further price declines.

European natural gas prices surged almost 40% on Wednesday as the potential for disrupted global LNG supply from Australia spooked traders betting on further price declines.

The European benchmark rose to more than €43 per megawatt hour, its highest since mid-June, in the wake of reports that workers at important LNG plants in Australia were planning to strike as well as some short covering.

The EU’s gas storage facilities are now close to 90 per cent full but it turns out that the continent is still fretting over an energy crisis after Russia’s supply, which accounted for around 40% of the EU’s gas demand, has been replaced.

Wall Street said that European prices could double by January, hitting €62/MWh should the strikes in Australia ‘begin soon and last until the start of winter or beyond’. That level is well below the peak of €340 seen last summer.

Brent Crude also rose, touching its highest since January after a steep drawdown in U.S. fuel stockpiles and Saudi and Russian output cuts offset concerns about slow demand from China.

Crude posted its sixth consecutive weekly gain last week. Breaking above the significant resistance level of 87, Brent looks set to head higher with RSI at around 50.

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