Four Reasons For Europe’s Record-Breaking Drop In Natural Gas Demand
Europe’s natural gas demand fell by the most on record last year, with the decline equivalent to the gas volumes required to supply more than 40 million homes, the International Energy Agency (IEA) said in a commentary on Tuesday. Natural gas consumption in OECD Europe fell by an estimated 13% in 2022, its steepest decline in absolute terms in history, IEA said in its quarterly gas report at the end of February. Demand in Europe fell amid mild winter weather and demand reduction in industry due to high prices. Significant changes in the energy mix, economic activity, weather, and consumer behavior were responsible for the dramatic shift in natural gas consumption in Europe last year, IEA’s analysts Peter Zeniewski, Gergely Molnar, and Paul Hugues wrote in the commentary. Record additions of solar and wind power helped lower gas demand, but record-high gas prices in the summer of 2022 also led to a lot of industry curtailments and lower consumption by industries and businesses, according to the IEA. Yet, the extent to which the high prices will lead to permanent reductions in demand in gas-intensive industrial sectors remains unclear, the IEA’s analysts say. In Europe’s industry, gas use fell by 25 bcm, or around 25%, in 2022, due to production curtailment and fuel switching, as the energy-intensive industries were the first to respond to the gas price shocks last year, the IEA said. In household consumption, “Policy measures – such as renewable support schemes, grants and preferential loans for housing retrofits and heat pump installations, alongside campaigns to encourage behavioural change – all played a part in moderating gas demand,” according to the analysts. The European Union managed to beat its target for cutting gas demand this winter, Eurostat data showed last month. According to the data, the EU’s winter demand has so far dropped by 19.3% compared to the five-year average, beating the 15% goal it set for itself to help it survive the winter without gas shortages.
ING Slashes 2023 Brent Oil Price Forecast To $90
Softer oil market fundamentals than previously expected prompted ING on Friday to slash its Brent Crude forecast for this year to $90 per barrel from $98, as a larger current surplus is likely to leave the market in a better position to handle an expected deficit in the second half of 2023. ING now sees Brent Crude prices averaging $100 a barrel in the fourth quarter, down from a previous projection of $110, Warren Patterson, Head of Commodities Strategy at ING, wrote in a note today. In the first half of this year, the surplus on the market would be higher than anticipated earlier, due to stronger supply out of Russia. The bigger surplus would mean that inventories are looking more comfortable. “This will leave the market in better shape to handle the deficit expected later in the year,” ING said. The bank, like other forecasters including the International Energy Agency (IEA), expects global oil demand to pick up strongly in the second half of 2023, leading to stronger oil prices. Earlier this week, the IEA said in its monthly report that the oil market is set to swing from a supply overhang in the first half of 2023 to a deficit in the latter part of the year as the economic rebound in China will push global oil demand to a record high. Oil prices were tentatively rising early on Friday, following the massive selloff earlier this week sparked by concerns about the banking sector in the U.S. and Europe with the collapse of two American banks and a scare at European giant Credit Suisse. Brent Crude traded at around $75 early on Friday in Europe, while WTI Crude continued to trade below $70, at $68 per barrel. “Recent events will likely question whether the Fed will be able to pull off a soft landing, which raises demand concerns,” ING’s Patterson said on Friday. The bank also believes that OPEC+ “will wait for the dust to settle before coming to a decision,” commenting on the market rout this week, which saw oil hit a 15-month low. Consultants at Energy Aspects also believe that OPEC+ will not be racing to react to this week’s oil price plunge and will wait for financial markets to calm down after the banking sector scare.
India Ranks Third Largest Primary Energy Consumer in the World
India has emerged as a major player in the global energy market, with the country ranking third in the world for primary energy consumption, according to the India Energy Outlook 2021 report by the International Energy Agency (IEA). Additionally, India is now the third-largest consumer of oil, third-largest LPG consumer, fourth-largest LNG importer, and fourth-largest refiner. These impressive statistics have been shared by Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, and have been applauded by the Prime Minister, who stated that India is committed to self-reliance in energy and sustainable growth. India’s energy requirements are met through domestic production and imports from various regions, including the Middle-East, Africa, Europe, North America, South America, and South-East Asia. To meet the increased demand for hydrocarbon fuel, India is adopting various strategies, including attracting investments in Exploration & Production to enhance domestic oil and gas production, shifting to a gas-based economy, improving refinery processes through technological upgradation, increasing energy efficiency and productivity, accelerating the bio-fuel economy, expanding overseas oil and gas portfolios, and diversifying oil and gas supply sources. The government has also taken up the development of a National Gas Grid and City Gas Distribution Networks to provide clean and green fuel to the public across major demand centers in the country. According to the Ministry of Power, India is adding significant thermal, large hydro, and nuclear energy capacity to meet its growing energy needs.
RIL shifts its oil traders to Dubai from Mumbai
Reliance Industries (RIL) has shifted most of its oil traders from Mumbai to Dubai, executing a plan announced in 2021, but which now coincides with the city’s growing stature as a commodities hub after Russia’s war. Most of the refiner’s oil procurement and trading are now conducted out of the UAE’s biggest city, said sources. An RIL spokesperson declined to comment when contacted on the matter. India and China have become key consumers of discounted Russian crude after most others shunned the OPEC+ producer’s barrels following the invasion of Ukraine.