British and Dutch wholesale gas prices declined on Thursday morning on weak demand, high storage levels and as traders awaited news about strikes at Australian liquefied natural gas (LNG) facilities next week.

The Dutch September contract inched down by 0.50 euro to 34.75 euros per megawatt hour (MWh) by 0949 GMT, while the contract for October was 0.98 euro lower at 37.60 euros/MWh, according to Refinitiv Eikon data.

In the British market, the September contract was down 1.00 pence at 87.43 pence per therm.

Traders said the market was waiting for news about strikes at Australian liquefied natural gas (LNG) facilities next week.

Chevron’s two major LNG production facilities in Australia could face daily work stoppages of up to 10 hours next week after unions on Tuesday threatened labour action in a dispute over pay and conditions.

“Reports of supply disruptions should not have such a robust impact on European gas prices in the coming weeks, but market speculators may as well use such headlines again to take advantage of such reporting even if it will not necessarily lead to physical shortages,” said Hans van Cleef at PZ Energy Research & Strategy.

“Should problems arise that have a longer impact on gas supplies, we should see that in winter or next year’s supply contracts,” he added.

Temperatures are expected to rise in Britain and north-west Europe over the coming days and will stay above-normal throughout September, according to Refinitiv Eikon data.

“We expect the arrival of warmer weather which will reduce demand not only for LDZ (local distribution zone) consumption but also from industry,” said Refinitiv gas analyst Ulrich Weber.

“The seasonally warm period seems to extend all the way through September, which will take pressure off balances and contribute to the expectedly soft situation once Norwegian production from Troll steps up towards the end of next week and beginning of the second week of September,” he added.

There is ongoing maintenance outages at Norwegian gas facilities and weak UK Continental Shelf production which could keep the market tight, but gas storage is still at high levels.

In the European carbon market, the benchmark contract edged up by 0.35 euro to 86.59 euros a tonne.
Source: Reuters (Reporting by Nina Chestney)