Dutch and British wholesale prompt contracts gained on Friday morning due to lower wind power generation, but prices along the curve eased amid uncertainty over the impact of potential strikes at Australian liquefied natural gas (LNG) facilities.
The British day-ahead contract TRGBNBPD1 rose by 3.00 pence to 83.00 p/therm at 0937 GMT, Refinitiv data showed. The Dutch day-ahead contract TRNLTTFD1 was up 0.60 euros at 34.00 euros per megawatt hour (MWh).
“With uncertainty about the month and season ahead weighing on the day-ahead price and increased gas-for-power demand following a drop in windspeeds we take a bullish view,” Refinitiv gas analyst Timothy Crump said in a morning note.
Refinitiv forecast UK wind power output at 15.5 gigawatts (GW) on Friday, dropping to 9.3 GW on Monday.
An uptick in Norwegian gas infrastructure maintenance next week will also tighten the supply-demand balance in Britain, Refinitiv said.
Further out, the front-month Dutch contract TRNLTTFMc1 was down 0.75 euros at 36.45 euros/MWh and the October contract TRNLTTFMc2 fell by 1.20 euros to 42.40 euros/MWh.
Workers at Chevron’s CVX.N Australian Gorgon and Wheatstone LNG facilities have begun voting on potential strike action, with ballots due to close by Aug. 24 and Aug. 28 at the latest.
Australian exports make up around 10% of global LNG supply.
“Any disruption lasting more than a month is likely to have a material impact on the supply-demand balance over the northern winter,” Daniel Hynes, senior commodity strategist at Australian ANZ bank said.
Last year, strikes at Shell’s Prelude LNG facility led to 76 days of disrupted production, he highlighted.
Still, Australian LNG from affected sites is mainly shipped to Japan and South Korea, Engie EnergyScan said.
“Knowing that LNG demand in these two countries is currently relatively weak, posting a year-on-year decline, it is not sure they would be willing to aggressively overbid to get LNG from other sources,” the analysts said.
The world’s largest LNG buyer, China was also unlikely to buy LNG at any price because it has cheaper alternatives such as coal, gas from domestic production and pipeline imports, they added.
Meanwhile, in Europe, full gas storages and limited demand from power plants were a bearish factor.
Gas storage levels across Europe were last seen 90.1% full, according to data from Gas Infrastructure Europe, already hitting a Nov. 1 target mandated by the European Union.
In the European carbon market, the benchmark contract CFI2Zc1 eased by 0.57 euros to 88.27 euros a tonne.
Source: Reuters (Reporting by Nora Buli in Oslo; editing by Nina Chestney)