Fears of LNG strikes in Australia push up freight and European gas price

This week, in European gas, the market remains focused on the potential for strike action in the Australian LNG sector, which could remove up to 10% of global LNG supply.

European gas prices have risen in recent weeks on fears that the strike could trigger a bidding war for LNG cargoes between Europe and Asia.

And day rates are strengthening in the Pacific LNG freight markets.

Market participants are rushing to secure additional volume, causing tonnages to become tighter, which in turn is driving rates higher.

But the primary concern for market participants is not the rate, it’s trying to find an available carrier to meet their needs this week.

The power sector will be monitoring French nuclear availability as temperatures rise in the south of the country.

Last week, French operator EDF warned of a likely impact on generation at two nuclear sites on the Rhone due to cooling water restrictions.

With temperatures forecast to reach 35 degrees Celsius from Tuesday, an extension of the warning this week would be no surprise.

In light of these rising temperatures across much of southern Europe, oil market participants are keeping an eye on refinery runs.

Run rates were reduced by 10-20% during last month’s heat wave, with impacts also noted on secondary units like FCCs and hydrocrackers.

Lower runs are helping maintain good margins for refiners at the moment, notably diesel cracks, which are unseasonably strong.

I’m Laura Varriale, thank you for kicking off your Monday with S&P Global Commodity Insights.

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