Dutch wholesale gas prices hit a nearly two-month intraday high this afternoon after news of possible strikes at Australian liquefied natural gas (LNG) facilities sparked concerns over cargoes moving to Asia.
The front-month Dutch contract jumped as much as 35% to €42 per megawatt hour (MWh) earlier in the session, hitting its highest level since June 15, before paring gains to €7.17, or 23.09%, at 38.22 EUR/MWh.
The Dutch October contract rose €7.55 to €42.70 per MWh, Refinitiv data showed.
"A fear that an outage in Australia could increase demand from Asia buyers for LNG that might otherwise come to Europe, has led to today's spike in prices," said Callum Macpherson, head of commodities at Investec.
Australian media reported that workers at Woodside Energy Group and Chevron facilities in Australia have voted to strike, without announcing the timing.
A strike would disrupt the country's LNG exports and increase competition for the super-chilled fuel, forcing Asian buyers to outbid European buyers to attract LNG cargoes.
A Refinitiv analyst said five LNG platforms could be affected. Exports from these projects account for around 11% of exports globally.
RBC Capital analysts said in a research note that roughly three-quarters of Australia's LNG exports go to the Big Four Asian buyers: China, Japan, South Korea and India, presumably under longer term contracts, and none to Europe.
"The loss of contracted volumes from Australia would likely see countries like China looking into the spot market for replacement cargoes, pushing up not only JKM prices but also European gas prices in another potential price war, as we have seen today," the analysts said.
The British day-ahead price rose 18.35 pence to 91.00 pence per therm, while the contract for immediate delivery was up 20.50 pence at 92.50 p/therm.
Wind power was expected to rise in Britain but gas prices in the UK market were buoyed by a lack of LNG deliveries, with no cargoes currently scheduled.
Peak wind power generation in Britain is forecast at 5.3 gigawatts (GW) on Wednesday and rising to 7.8 GW on Thursday, Elexon data showed.
In the European carbon market, the benchmark contract CFI2Zc1 was down €0.36 euro at €83.98 a tonne.
