Gas Prices Rise in Europe on Australia LNG Strikes, Middle East Tension Fears

Chevron Wheatstone Platform - Credit: Chevron Australia
Chevron Wheatstone Platform - Credit: Chevron Australia

Dutch and British wholesale gas prices rose on Monday morning as workers at Chevron liquefied natural gas (LNG) facilities voted to restart strikes, expectations of colder weather, and amid fears of tension in the Middle East region.

The Dutch November contract rose by 3.37 euros to 41.60 euros per megawatt hour (MWh) by 1025 GMT, while the December contract was 1.68 euros higher at 44.78 euros/MWh.

The British day-ahead contract rose by 11.50 pence to its highest level in seven days - 91.00 pence per therm. The November contract was up 6.75 pence at 101.25 p/therm.

Workers at Chevron's two LNG facilities in Western Australia voted to restart strikes on Friday, with unions accusing the U.S. oil major of reneging on a deal that ended strikes last month.

Chevron must be given seven business days notice before strikes can begin and unions said they plan to file the notice on Monday.

"Obviously, the return of concerns on Australian LNG is challenging the bearish momentum. But we believe the price increase is temporary and that for the moment prices remain within the limits of market volatility," said analysts at Engie EnergyScan.

There are also fears about a wider conflict in the Middle East due to military clashes between Israel and Palestinian Islamist group Hamas. Oil prices rose more than 2%.  

Temperatures in Britain and north-west Europe are expected to drop later this week which could raise demand for heating, while wind speeds are expected to be variable, LSEG data showed.

Meanwhile, the Baltic connector pipeline between Finland and Estonia was shut on Sunday due to a suspected leak. Repairing it could take months or more if a puncture is confirmed, Finnish gas system operator Gasgrid said.

France's gas grid operators said on Monday that the country should have sufficient gas supplies even if there is severe cold weather this winter but substantial imports of LNG and further imports from Spain will be needed, along with smart storage management and relatively low consumption levels on par with last year's.

In the European carbon market, the benchmark contract inched up 0.25 euro to 80.71 euros a tonne.

(Reuters - Reporting by Nina Chestney)

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