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European demand for gas at its lowest level in 10 years

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Europe has cut gas demand by 20 percent since the Russian invasion of Ukraine. Demand has therefore fallen to the lowest level in 10 years, reports the Institute for Energy Economics and Financial Analysis (IEEFA). Lower demand in large countries such as Germany, Italy and Great Britain mainly contributed to the decline. The institute’s researchers expect demand for liquefied natural gas (LNG) to peak next year.

Russia’s invasion of Ukraine in February 2022 caused a huge shift in the European gas market. Gas from Russia supplied via pipelines was replaced by the import of LNG, mainly from the United States. Due to a limited number of import terminals, European countries were also forced to take measures to reduce gas consumption. High gas prices and mild winter temperatures also helped reduce demand.

“Europe has successfully weathered the energy crisis and has prepared itself to continue reducing gas use,” IEEFA said.

The price of natural gas fell on Monday to the level of August 2021, even before the Russian invasion of Ukraine and the energy crisis that followed. The price to supply natural gas in 2025 has fallen to 28.45 euros for a megawatt hour. That is the lowest level since August 2021. The ‘cal2025’ is today the reference contract on the natural gas market.

With the price at its lowest level since 2021, “the energy crisis has in fact been consumed,” says Matthias Det emmerie, trader at energy supplier Elindus. Yet specialists point out that Europe remains very vulnerable to supply shocks, for example if demand were to suddenly increase due to an industrial recovery.

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