TELF AG examines European Gas Futures – September 19, 2023
European Gas Futures Soar Amid Chevron Strikes in Australia
European natural gas futures witnessed an 8% surge, reaching €35.5 per megawatt-hour last Friday. The increase can be attributed to failed union discussions and the commencement of partial strikes at two Chevron facilities in Australia. These facilities are pivotal in the global natural gas landscape, responsible for more than 5% of the worldwide supply, with a significant portion dedicated to meeting Asia’s requirements.
The current scenario paints a complex picture for the future of LNG supply. If these strikes are prolonged, a considerable disruption in operations could be on the horizon, which might lead to a decrease in LNG supply. This becomes even more crucial as Asia gears up for increased LNG demand during the peak winter months.
On the other hand, Europe is currently experiencing a rather calm period in terms of gas demand. Fuel reserves in the continent stand at approximately 93% full. These figures are noteworthy, marking the highest levels ever observed during this period. Furthermore, these levels have achieved the European Union’s target well before the stipulated date of November 1st.
Yet, even with such substantial reserves, the cost for European consumers continues to be a concern. The current gas prices in Europe hover around figures that are approximately 50% above the pre-invasion long-term averages. Such elevated prices have implications beyond domestic heating, as they affect sectors of the industry. Notably, Germany’s automotive and petrochemical sectors are feeling the pinch.
Amidst these high prices, there are increasing concerns in the business community. There’s a prevailing sentiment that if this trend of rising prices persists, it could spur energy-intensive industries to consider relocation. This could pave the way for a potential de-industrialization phase, with industries seeking more cost-effective environments.
In conclusion, the landscape of European gas futures remains fluid. The ongoing issues at Chevron’s facilities in Australia, coupled with the upcoming winter demand from Asia set the stage for an interesting period ahead. Europe, with its ample reserves, will be keenly observing how these events unfold, especially given the economic implications of prolonged high prices.
