In 2024, global natural gas demand was estimated to have recorded a strong 2.9% growth, to stand at a new record of 4166 bcm, representing an annual incremental volume of 118 bcm. By way of comparison, growth over the pre-crisis period 2010-2019 stood at 2.4 %/year. This rebound was partly due to structural growth factors, which are expected to persist in the long term, including energy policies in favour of the expansion of gas, the booming Asian gas market, the growing role of gas as a dispatchable electricity source supporting intermittent renewables, increased use of LNG for transportation and more sudden and extreme climatic events which reinforced the crucial role of gas-fired power generation for peak load. On the supply side, global marketed natural gas production increased more moderately by 1.7% to 4159 bcm, driven predominantly by Russia, China and Norway. Despite tight LNG supplies, demand continued to grow robustly as major consumer markets tapped into their abundant stocks during periods of market tensions to ensure gas supply security and flexibility. In this context, European and Asian spot prices softened from the previous year but remained elevated. High price volatility reflected unforeseen events on both the supply and demand sides, including geopolitical tensions and extreme weather events.
Natural Gas Prices
Quarterly report – Q2 2023 – International natural gas prices
In the second quarter of 2023, European and Asian spot prices continued to fall sharply in a context of weak demand and high inventories in the three major consumer markets (Europe, Asia and North America). In the second quarter of 2023, European and Asian spot prices were on average 60% lower than in the second quarter of 2022 but remained historically high. Improving gas supply-demand balances have resulted in a relatively abundant supply of LNG on the international market and high stock levels, particularly in Europe. As a result, the markets are not currently anticipating any major supply tensions in the short term. However, this view may change depending on weather conditions, which remain the main factor of risk and uncertainty.
Quarterly report – Q1 2023 – International natural gas prices
In the first quarter of 2023, European and Asian spot prices continued the downward trend observed since the summer of 2022, despite the fall in Russian pipeline gas deliveries. European gas prices have reached their lowest level since the summer of 2021 but remain two to three times higher than the historical average. These relatively calm market conditions are due to several factors: a milder than normal winter which has reduced gas consumption for space heating, continued strong LNG imports into Europe and lower gas consumption in all sectors. These developments have kept European storages at record levels, which is a bearish factor on forward prices.
Evolution of international gas prices in the first quarter of 2023
In the first quarter of this year, the EU TTF price was 42% lower than in the previous quarter, at $16.8/MBtu (€54/MWh), returning to a level similar to that in the third quarter of 2021. The TTF bottomed out at $12.6/MBtu (€40/MWh) on the 20 March, its lowest level since the summer of 2021. European market fundamentals are bearish. It is estimated that in the first quarter of this year, EU gas consumption was 17% below the seasonal average. Against this background, continued strong imports of LNG and Norwegian gas have allowed to both replace Russian pipeline gas and ensure a very high level of gas storages.