European gas demand jumped in early January as colder weather boosted space heating needs and supported higher gas-fired power generation.
Europe’s gas demand surged by 20% YoY in the first ten days of Jan 26, as colder weather boosted space heating demand and supported higher gas-fired power generation.
Daily European gas demand climbed to over 2,000 mcm/d last week, its highest daily levels since Jan 22. Gas consumption across the residential and commercial sectors grew by 18% YoY, with the cold spell supporting higher space heating requirements across the Northwest and Central European markets.
In addition, gas-fired power generation surged by nearly 30% YoY, partly supported by stronger heating needs and partly by lower wind power generation during the coldest days of the cold spell.
As usual, underground gas storage sites played a key role in ensuring adequate gas supplies. Net storage draws surged by 35% YoY, meeting over 60% of the incremental gas demand. Consequently, Europe’s fill levels dropped to below 60%, with inventories now standing 12 bcm below last year’s levels. This could, in turn, support stronger storage injections over the upcoming summer.
The second most important flexibility contributor over the cold spell was LNG, with send-outs jumping by almost 25% to meet around one-quarter of the additional demand.
These events highlight the critical importance of natural gas infrastructure in ensuring Europe’s broader energy security, with storage sites and LNG complementing each other as crucial flexibility providers.
What is your view? How will the European gas market navigate through the winter? How will the role of gas storage evolve in the coming years?
Source: Greg MOLNAR
