5 key takeaways from the new quarterly IEA natural gas report are:
- European gas demand is set for its steepest drop on record: expected to decline by around 55 bcm, largely driven by demand destruction in industry;
- Winter is coming: gas savings from consumers will be crucial to go through this winter safely. our simulations indicate that a demand reduction of 13% would be necessary to sustain a full cut in Russian gas supplies;
- Guess who is back: long-term, destination-fixed contracts are making a marked return, accounting for around 90% of contracted volumes in 2021;
- Slowing down: global LNG trade growth further slows down to 4% in 2023, amidst very low new liquefaction capacity additions;
- A multi-year issue: the current tight market conditions are here to stay. reduced Russian flows, together with low LNG capacity additions and high storage injection needs in Europe will sustain market tightness well beyond the heating season.
What is your view? How will gas markets evolve in the new Gas Year? Do you see any signs of relief?
Source: Greg Molnar
