The wholesale gas price for the European market resumed its strong growth today. Shortly after the start of trading in the Netherlands, it climbed above 42 euros (CZK 1,008) per megawatt-hour (MWh), showing an increase of about 15 percent compared to Friday’s close, market data showed. Analysts said lingering fears about the impact of strikes in Australia were to blame.
Supply Disruption Impact
The price of the key gas futures contract for September delivery at the Title Transfer Facility (TTF) virtual trading hub, which is a price determinant in Europe, was around 39.60 euros shortly before 10:00 CET, a daily increase of more than nine percent. Prices for contracts for delivery in the coming months are even higher, with the January contract around 58 euros/MWh.
Gas prices in recent days have been noticeably affected by concerns about disruption to the continuity of supply of the raw material from Australia, a major supplier to the world market. This week, Australian producers are facing important wage negotiations with union representatives and if no agreement is reached by Wednesday, workers at Woodside Energy’s liquefied natural gas (LNG) plant plan to strike later.
The TTF gas price has thus returned to close to the long-term high of mid-June. Employees at the three Woodside Energy and Chevron plants in Australia want better job security alongside higher wages, the UK’s Financial Times (FT) reported. According to a statement on Sunday from the Offshore Alliance, which represents the two unions, the workers had earlier unanimously backed a proposal to give the company seven working days’ notice that a strike would begin if demands were not met by the end of Wednesday’s shift.
Australian Labor Strife
The strike could begin on September 2, according to the union. The notion that strikes in Australia could adversely affect up to ten per cent of global LNG exports has already alarmed traders in Europe.
Analyst Carsten Fritsch of the financial institute Commerzbank recently pointed out that less gas could come from Norway in the short term due to maintenance on infrastructure. Gas prices on the European market are therefore likely to continue to fluctuate significantly, even though EU gas storage facilities are currently about 90 percent full.
Last August, the wholesale price of gas for the European market climbed to close to €350 per MWh due to supply constraints from Russia, while before 2021 it was well below €20 per MWh. Since the end of last year, the price has been on a downward trend, which has nevertheless been accompanied by occasional increases, sometimes very significant. According to analysts, the price of gas started to rise before the war in Ukraine, in response to the European Union’s energy policy.
Source: ČTK
