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Lower European natural gas prices forecast for next summer – Wood Mackenzie

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Lower European natural gas prices forecast for next summer – Wood Mackenzie

According to a new report by consulting firm Wood Mackenzie, European natural gas prices for next summer are projected to be 20% lower than current estimates. This decrease is attributed to decreased demand from power plants and ample supplies in storage.

As Europe enters the colder months, stockpiles of natural gas remain above the seasonal norm. Furthermore, the use of gas for power has declined, with renewables gaining market share, nuclear output increasing, and economic pressures impacting industrial and residential consumption.

Wood Mackenzie states, “The European gas sector looks set to experience a decline in gas demand, which will have a knock-on effect on prices next year. Gas usage for power is expected to decrease by 12% year-on-year in 2024, following a similar decline in 2023.”

The consulting firm also anticipates a tighter market in 2025 as Russia’s gas transit deal with Ukraine expires. This, combined with gradual global LNG supply additions and increasing Asian demand for natural gas, will limit the volumes available for Europe.

In the United States, Bank of America predicts that, despite the Texas heatwave reducing the natural gas storage surplus significantly, a mild winter could drive inventories to record levels and push prices below $2/MMBtu in Q1 2024.

Conclusion

The European natural gas market is poised for lower prices next summer due to diminished demand and ample supplies in storage. While the gas sector is facing a decline in usage for power, the outlook for tighter markets in the future suggests the need for strategic planning and diversification of energy sources.