European natural gas prices tumbled on signs that a labor dispute at Australia’s biggest liquefied natural gas export plant will be resolved, easing fears about one of three possible strikes in the key exporting nation.
Benchmark futures collapsed as much as 21%, the most since March 2022, on Thursday. Gas prices have been extremely volatile this month as traders await the outcome of threats of industrial action that could impact a tenth of global LNG supplies, at one point surging as much as 40% in response to the risks.
Unions representing workers at Woodside Energy Group Ltd’s North West Shelf LNG operations are considering a “strong offer” from the company after negotiations that ran through Wednesday night. Details of the settlement will be released after a meeting with members on Thursday, the Offshore Alliance — a group that represents two major unions, said.
Europe, still recovering from the worst of the energy crisis that pushed prices to records last year, has been highly reactive to supply disruption risks. Even with ample stocks, the region needs a continuous flow of LNG from global markets. Any prolonged shutdown of Australian facilities, which supply Asia, could risk shifting US or Qatari LNG away from European markets.
With inventories full well before the start of the heating season and industrial demand subdued, Europe for now remains well supplied.
“We will need to see what the unions finally decide at their meeting today, but all indications at the moment look promising that strike action at the North West Shelf will be avoided,” ING Groep NV said in a note on Thursday.
Even if a deal is agreed with Woodside, talks with Chevron Corp. on disputes with workers at two of its Australian LNG facilities are still ongoing. That puts 24.5 million tons of annual capacity is at risk, or about 5% of global liquefaction capacity.
Dutch front-month futures, Europe’s gas benchmark, were trading 17% lower at €30.48 a megawatt-hour at 8:20 a.m. in Amsterdam.
--With assistance from Stephen Stapczynski and Elena Mazneva.