Gas Prices Lower On Soft Demand Despite Looming Strike Action

European LNG prices fell 8.5% on Tuesday to EUR38 to be up 14.5% this month, as demand concerns outweighed possible supply disruptions in Australia. With industrial production soft, demand for gas may also be lower depending on the European winter. North Asian prices fell 0.5% on the day to be up 9.3% in August.

• The impact of industrial action at Chevron’s North West Shelf facilities will depend on how long the action is in place, as it is not expected to impact output immediately.
• Unions have given notice of industrial action at three of Chevron’s facilities due to start on September 7 which will impact LNG exports. There will be rolling stoppages of up to 10 hours, bans and limitations which will intensify each week until Chevron agrees to workers’ “bargaining claims”. Chevron has said that it will continue negotiations. The affected plants produce around 6% of the world’s gas supply, according to ANZ.
• European gas storage is currently 93% full and imports into northwest Europe are higher than normal for this time of year. Norwegian flows are also picking up after extensive maintenance.