Nov 10, 2022
Europe’s Gas Use Slides 22% as Households Keep the Heating Off
(Bloomberg) -- Europe reined in its natural-gas consumption last month as households kept the heating off amid warm weather, providing some relief to a tight market ahead of winter.
Governments across the region have been pleading with consumers to reduce their gas use after a slump in Russian supplies raised the specter of rationing once the weather gets cold. A mild autumn has helped conserve the fuel, but power plants continue to burn increasing quantities to keep the lights on.
Western Europe’s total gas demand in October fell 22% from a year earlier, led by residential, business and small industrial users, according to data from Engie SA’s market-analysis platform EnergyScan. The electricity sector increased consumption by 14%.
Aside from the warm weather, demand has been curtailed by rocketing prices, with many small industrial users cutting back operations to survive. That retrenchment, together with strong inflows of liquefied natural gas and brimming storage sites, has helped to ease concerns that governments will have to limit supplies to customers over the coming months.
There are “emerging signs of behavioral change regarding heating usage,” said Julien Hoarau, head of analysis at EnergyScan. That’s helped to exert “strong bearish pressure on spot gas prices across Europe and strengthened the continent’s ability to balance its gas system this winter.”
While benchmark prices remain three times higher than the five-year average, they’ve declined more than 60% from their August peak.
Gas demand from residential, business and small industrial users dropped 33% in October, while usage by large industrial consumers fell 27%, according to EnergyScan data. Strong demand from the power sector pared the overall decline as a wave of nuclear-plant outages in France and low hydroelectric output elsewhere forced countries to burn more gas.
See also: Engie Says European Gas Demand Plummets as Bills Climb
Gas use for electricity generation in France more than doubled in October compared with a year earlier, the data show, while neighboring countries also resorted to more gas-fired power. The shift was in some instances helped by the recent drop in prices, which boosted gas’s appeal versus coal. Germany used about 40% more gas to fire power plants last month.
Read more: Too Much Gas. Europe’s Energy Crisis Takes a Surprise Turn
Uncertainty continues to cloud the coming months, with both supply and demand hard to anticipate.
The onset of colder weather will inevitably make demand reductions harder, while measures to cap prices in some nations may curb the incentive to cut back, as seen in Spain. A restart of idled operations among European industry would also stretch supplies, though an improvement in French nuclear output next year -- and more rain -- could reduce the use of gas for power, Hoarau said.
©2022 Bloomberg L.P.