CEDIGAZ’ Natural Gas in the World 2016 report confirms the provisional estimates published early May, showing a moderate natural gas demand growth in 2015 for the third year in a row. Global gas consumption grew by 1.5%, still below the ten-year growth rate of +2.2% despite low gas prices. The global marketed natural gas production growth was again led by the United States (shale gas).
Like in 2014, the natural gas expansion was constrained by some demand side factors which have offset the impact of low gas prices: intense competition with cheaper coal (and oil in China) in both industrialized and emerging markets, the development of nuclear and renewables, as well as increased energy efficiency, weak power generation growth and the sluggish economic context.
NBP: Strong upward pressure
In October, the NBP price saw a spectacular 44% rise to €16.4/MWh ($5.3/MBtu). This is slightly higher than the price of oil-indexed contracts, a sign that the market is tightening. The NBP continued to climb in early November and now stands at about €20/MWh ($6.5/MBtu). With the slowdown in exports from the United Kingdom to Europe via the Interconnector, this phenomenon now affects all European gas prices.
NBP: down in August and September, up in October
The slight pressure on the NBP price in the month of June has turned out to be transient, due to temporary supply constraints. Since then, it has fallen steadily, losing nearly 6% in July, 13% in August and another 6% in September. The September average was €11.4/MWh ($3.7/MBtu) compared to €14.8/MWh ($4.9/MBtu) in June, a drop of 23%.
September saw strong volatility in the NBP price. Early in the month, it stayed within an extremely low range (€8.3 to 11.3/MWh), subject to significant variations in supply and demand. This temporary weakness in the price also reflected that the Interconnector was saturated during this period, preventing the export of surplus gas to the Continent. The NBP, tending to trend upward since September 14, remained very volatile at €12 to 14/MWh ($3.9 to 4.6/MBtu).