In July, the demand for natural gas in the European Union and the United Kingdom saw an increase compared to the previous month, according to the latest data from the Joint Organizations Data Initiative (JODI). However, the rise in gas inventories outpaced the increase in demand as Europe prepares for the winter season by stockpiling gas.
The International Energy Forum (IEF), based in Riyadh, shared the JODI data, which revealed that the natural gas demand in the EU and UK climbed by 1.3 billion cubic meters (bcm) from June to reach 200.1 bcm in July. On a global scale, the demand for natural gas experienced a more significant increase of 12.9 bcm in July, surpassing the 5-year seasonal average.
Among the 45 countries that report their data to JODI, there was a significant jump in natural gas inventories in July, with a month-on-month increase of 9.7 bcm. This rise marked a new historical high when compared to the last five-year seasonal period.
Specifically, in the EU and the UK, gas inventories grew by 7.1 bcm month-on-month and by 0.38 bcm year-on-year. This increase positioned the inventories 7.6 bcm above the 5-year seasonal average, as indicated by the data.
As of September 16, EU storage levels were reported to be 93.4% full by Gas Infrastructure Europe. This high storage level is a positive sign for Europe as it heads into the winter heating season. However, the stored gas is not sufficient to cover the entire winter’s consumption. Consequently, Europe relies on a steady supply of gas from Norway, its leading gas supplier, and imports of liquefied natural gas (LNG).
Regarding production, global natural gas output rose by 4.7 bcm in July compared to the previous month. Despite this increase, there was a year-on-year decrease of 1.2 bcm. The decline in annual production was primarily due to the United States, Egypt, Indonesia, the United Kingdom, and Canada.
In the early part of this year, when natural gas prices reached multi-year lows following the end of the winter and the beginning of spring, U.S. producers and pipeline operators recognized an oversupply in the market. Nevertheless, they remain optimistic that there will be sustained domestic and international demand for natural gas for many years to come.