European Gas Prices Swing as Weak Demand Counter Outages

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(Bloomberg) — European natural gas prices fluctuated as traders weighed weak demand against supply disruptions from Australia to Norway. 

Benchmark futures swung between gains and losses, after surging to the highest in over two weeks in the previous session. A fault at the Wheatstone liquefied natural gas plant in Australia cut production by about 25%, operator Chevron Corp. said Thursday. That’s in addition to escalating strikes at the plant, as well as Chevron’s Gorgon facility. 

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The disruptions are countered by high storage levels in Europe just weeks ahead of the heating season. The region’s fuel consumption remains weak after last year’s energy crisis led to severe cuts. Gas prices have eased significantly from 2022 records, but they are still elevated compared to historic averages, highlighting the region’s fragility. 

Chevron said it’s working to resume full production at Wheatstone. Plus, its requests for a regulator to intervene in the labor dispute will be heard next week, which may help in the stalemate. Yet, lengthy walkouts — coupled with outages elsewhere — increase the risk of tightening global supplies, keeping markets on edge. 

Traders remain nervous amid heavier-than-expected maintenance in the continent’s top gas provider, Norway. On top of that, the Freeport LNG plant in Texas has canceled at least three cargoes in recent days due to an outage, adding pressure to an already volatile market.

Dutch front-month futures, Europe’s gas benchmark, dropped 1.4% to €36.32 a megawatt-hour by 9:56 a.m. in Amsterdam. It gained as much as 3.2% earlier on Thursday. The UK equivalent fell 1%.

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