The ongoing strikes at Chevron have failed to drive up gas prices, contrary to expectations. Despite the industrial actions, Chevron is succeeding in meeting demand. In addition, European countries currently have the luxury of blocking the filling of their reserves.
The gas price has fallen this week. On Wednesday, September 13, gas traded for €36,82 per megawatt hour. Then the gas price fell. On Monday, September 18, the trading price for gas fell to €34,48. On Tuesday, the gas price rose slightly to €34,93.
The strikes at the Australian company Chevron remain the most important theme on the gas market. The strikes were originally expected to last until the end of this month, but the unions have now announced that the strikes will be extended until at least October 14. Talks between Chevron and the unions took place on Monday and Tuesday. The Australian Fair Work Commission acts as mediator. However, analysts do not seem to be in a positive mood, as five previous discussions came to nothing.
Until recently, fear of strikes at Chevron caused a significant increase in gas prices. The LNG giant supplies approximately 5% of global LNG exports. Yet this is hardly visible on the TTF. At the beginning of the week there was some upward price pressure every now and then, but the market is now down compared to last week. This is partly because Chevron has not yet had to postpone deliveries despite the strikes. Production has fallen to approximately 80%, but due to relatively low demand, the lower production does not yet appear to hinder the supply of liquefied gas.
Strategic reserves
But there is another reason. Since the summer, analysts have been writing almost constantly that the high filling levels bring stability to the European gas market. While this has more or less always been true, the effects are a lot clearer than before. Until recently, high filling rates mainly reduced the risk of a price rally as we saw in the summer of 2022, when gas prices rose to almost €340 per megawatt hour.
Now that many European countries have formally achieved their filling targets, the member states are going one step further. Governments are choosing to temporarily halt the filling of their gas reserves. The governments are aiming for lower prices, with the aim of restarting filling when prices are favorable enough. With the policy, Member States are not only able to reduce the price of further filling the reserves. The policy also reduces the price of gas that is used directly.
The fact that European countries have managed to suppress the upward price pressure from the strikes does not mean that the Australian troubles no longer pose a risk at all. The margins are still not wide. For example, the Netherlands currently has a filling rate of 95,1%, while the filling target is 95%. In addition, the heating season is about to begin. If winter comes before the strikes are resolved, heating could become expensive again.