The gas market seems to have entered somewhat calmer waters. News about mediation in the Australian gas sector seems to be taking hold, while new threats from trade unions barely touch the prices on the TTF. This is striking, given the extensive work on the Norwegian gas network.
On Wednesday, August 30, gas traded at the highest price of the week. At that time the TTF was trading at €39,38. After that, the gas price fell almost constantly. On Monday, September 4, gas traded for €33,57. On Tuesday, September 4, the price rose slightly to €33,95.
The lower listing follows the news that the Australian LNG company Chevron has started a mediation process with the unions. According to analysts, it appears that there will be no strikes. The gas market has been in turmoil in recent months due to possible strikes at the two major Australian gas companies Chevron and Woodside Energy. Yet the situation remains tense. On Tuesday, September 5, Australian unions indicated that a total strike is currently being planned should negotiations fail. It is striking that the TTF reacted only lightly to the news. It seems that the market has confidence in the ongoing negotiations and is taking the unions' statements with a grain of salt.
The news is all the more striking given that several Norwegian gas fields are still under maintenance. In fact, on Monday, September 4, it was revealed that gas supplies from Norway are currently at their lowest point since September 2019. The large Troll field has been out of use since August 26, but the Visund and Kvitebjorn fields have also stopped in recent weeks. In addition, unplanned work on the Dvalin field appears to be necessary.
Industrial figures
The fact that the gas price does not react too strongly to the possible strikes in Australia is partly due to new figures about the German economy. Recent figures show that the German economy is starting to shrink faster. The German PMI fell to 44,6 points in August. With a PMI of 50 there is neither growth nor contraction. A figure below 50 indicates shrinkage. A lower figure represents a greater contraction within the PMI. In July the PMI was still 48,5. Manufacturing continues to suffer from weaker economic performance, although the services sector is also shrinking for the first time since the Ukraine war. The weak German economy has direct consequences for gas demand. Between January and August 2023, German gas imports decreased by 17,9% compared to the same period last year.
In addition, European demand appears to be declining due to high filling rates. On average, European gas reserves are more than 93% full. The Dutch filling rate is even just above that at 95%. This means that the goal of the Dutch Gas Union is in sight and full filling of the reserves seems feasible. Analysts point to the high filling rates as the main reason for the low volatility of gas prices. Although this explanation does not seem to be the answer. Two weeks ago, the filling of reserves was well ahead of expectations, but the disruption of the Australian LNG market managed to send the price of the TTF towards €44.