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European gas prices fell sharply on Thursday as the possibility of a strike at a key liquefied natural gas plant in Australia faded, easing traders’ fears that the shutdown would squeeze global supplies.

TTF futures fell 11% to 32.50 euros per megawatt-hour ($10.2 per million British thermal units), after falling 18% after Australia’s unions and management reached a tentative agreement over a dispute. The threat will develop into a strike in the coming weeks.

The European benchmark, which fell 15% on Wednesday, lost more than a quarter of its value in two days, as fears of a possible disruption to global supply that had gripped gas markets for a month faded.

Traders were concerned about the risk of strikes at three Australian liquefied natural gas facilities, which together account for about 10% of global LNG supply. The union has pushed for better terms on pay, rostering, job security and safety conditions on a platform run by Woodside Energy.

Woodside’s Northwest Shelf (NWS) facility accounts for about 4% of global LNG supply. Woodside said overnight it had reached “agreement in principle on a range of issues” with the offshore alliance coalition, significantly reducing the likelihood of LNG supplies. Strike action by its offshore gas workers.

The risk of supply disruptions from Australia, one of the world’s largest producers of liquefied natural gas and a major exporter to the Asian country, has sent European gas prices surging this month. TTF’s close on Tuesday was its highest close since April.

LNG from Australia rarely reaches European shores directly. However, if Asian buyers of Australian LNG need to find alternative sources, they will be competing with Europe. Europe has come to rely on LNG after Russia slashed pipeline gas exports to the region following its invasion of Ukraine.

The competition will become more pronounced heading into winter, when demand for ultra-refrigerated fuel will increase and could drive up inflation and the cost of living.

Traders have called the sell-off in recent days an “overreacting market correction.”

Wayne Bryan, director of European gas research at Refinitiv, said: “Recent market moves have shown just how dependent Europe is on ultra-chilled fuels and is vulnerable to price spikes and heightened volatility.”

He added that for now the market is “comfortable that LNG supplies will not be disrupted”, while factors depressing prices, such as the abundance of gas in EU storage facilities, “should prevail”. On Tuesday, EU gas storage capacity reached 91.6%.

Woodside said the union had made “substantial progress” during a marathon meeting that lasted into the night on Wednesday. NWS staff will vote later Thursday on whether to accept the deal.

“The offshore alliance, at the direction of its members, has entered into an industry-standard corporate agreement that meets key outcomes. It is up to members to determine whether the deal reached this morning complies with that requirement. The alliance is confident in that,” said Alliance spokesman Bullard Brad Gandy said.

Analysts said the Woodside deal further strengthened its position for final negotiations with Chevron.

Workers at Chevron’s Wheatstone and Gorgon LNG plants, two other plants, voted overwhelmingly on Thursday to take strike action if necessary. Two other plants are also under threat of supply disruptions.

Saul Kavonic, head of integrated energy and resources at Credit Suisse Australia, said Chevron had higher union penetration than Woodside and thus had more leverage in negotiating with US companies.

Cavonic also said that now that some of Chevron’s rivals have struck deals with the union, it will be harder for Chevron to stick. “When Inpex, Shell and now Woodside have all accepted the union’s demands, it is much harder for Chevron to refute the union’s demands,” he said.


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