European natural gas prices surge again! Up 18% during trading, Australian LNG strike may begin.

Due to the unresolved labor dispute between Woodside Energy, an Australian liquefied natural gas company, and its workers, there is a possibility of global disruption in the supply of liquefied natural gas if the workers decide to go on strike. On Tuesday, European natural gas futures surged by as much as 18% during trading, reaching a high of 40.7 euros per megawatt-hour.

Last Wednesday, European natural gas prices skyrocketed by 40%. The sharp increase on Tuesday seems to have brought European natural gas back into the intense volatility of significant fluctuations that occurred a year ago. Is this the "new normal" for European natural gas? For more detailed analysis, please refer to the article "Why is European Natural Gas Surging Again?".

According to media reports, Woodside Energy and the union held talks on Tuesday, and although some progress was made, the two sides have not come close to reaching an agreement, so the strike scheduled for Friday may still take place.

The strike could pose a risk of interruption to up to 10% of global liquefied natural gas exports. Although Europe rarely purchases Australian natural gas, the European Union needs to compete with Asian countries for alternative sources of liquefied natural gas.

An analyst from the UK stated:

Preliminary negotiations between the union and the shareholders of the liquefied natural gas company have not made any breakthroughs. The likelihood of reaching a comprehensive solution is extremely low.

A spokesperson for Woodside Energy stated that they have not received any notification of strike action from the union.

Some analysts believe that any signs of future strike actions could cause a surge in European natural gas prices before the heating season, due to concerns about supply interruptions.

Although current natural gas inventories in Europe are well above normal levels for this season, the region is vulnerable to potential delays in maintenance plans by major producing countries such as Norway. Energy traders also anticipate a continued rise in temperatures in Southern Europe, Germany, and France, which could lead to a surge in cooling demand and accelerated consumption of stored natural gas in Europe.

John Evans, an analyst from brokerage firm PVM, stated that despite large-scale natural gas deals between Germany and other European countries and other nations, "there is still a possibility of shortages and a need to revert to spot purchases, as was the case in 2022."

In a research report, Evans said:

Australia is now the largest exporter of liquefied natural gas, surpassing Qatar and the United States, but European buyers are concerned about supply security due to production issues and damaged gas fields, and they are replenishing their inventories from the spot market before winter arrives.