Gas demand across Europe was geographically varied in November. Milder weather and high wind generation cut aggregate demand across most of Northwest Europe, while colder weather and low hydro generation supported Spanish and Italian demand. Strong Russian supply into Germany and onward into Central Eastern Europe curbed storage withdrawals in those regions, while lower Groningen output cut Dutch production and exports.
Lower LDZ demand and less gas into power shrank UK end-user consumption by 1.12 bcm to 7.28 bcm last month. A 1.42 TWh (64%) y/y increase in wind generation lowered UK power sector gas burn by 0.28 bcm (13%) y/y to 1.85 bcm. Similar dynamics curbed aggregate German demand by 0.50 bcm y/y to 9.6 bcm. In Belgium and the Netherlands, aggregate gas demand fell on milder weather, but French demand rose by a small 60 mcm to 4.80 bcm on higher res-com and industrial demand. We forecast that a return to normal temperatures will increase UK end-user demand over Q1 18 by 0.49 bcm y/y. Mean temperature reversion and lower French hydro levels will raise Q1 18 gas demand by a combined 0.25 bcm y/y in Belgium, France and the Netherlands, despite a modest y/y rise in French nuclear availability.
Spanish hydro generation shrank by 42% y/y to 1.02 TWh in November, driving a 0.21 bcm (33%) y/y increase in power sector gas demand. Heating demand also rose on colder weather, pushing aggregate gas consumption 0.32 bcm higher y/y to 3.19 bcm. Total Italian gas demand expanded by 0.43 bcm y/y to 7.81 bcm due to lower temperatures and hydro generation levels down some 32% (0.97 TWh) y/y at 2.06 TWh. For Q1 18, we expect strong Spanish power sector gas demand to drive a 0.93 bcm (11%) y/y rise in total gas consumption, while Italy will consume 0.27 bcm more y/y on mean-reverting temperature assumptions.
Aggregate EU imports of Russian gas in November were up by1.2 bcm y/y at 14.6 bcm. Russian flows were down into the eastern markets that feed into the Baumgarten hub, albeit by a modest 0.04 bcm y/y. But Russian flows into Germany via Nord Stream were higher y/y 1.24 bcm, reflecting Gazprom’s desire to heavily use its access to more OPAL capacity. Dutch output was lower again in November owing to a stricter Groningen cap and the milder weather, with the drop in domestic output tightening cross-border differentials and discouraging continental flows to the UK. The Netherlands increased its take of Norwegian gas, leaving net Norwegian supply into Germany down by 0.11 bcm y/y at 1.71 bcm, which led to a 0.15 bcm (40%) drop y/y in Swiss flows into Italy. Total North African exports to the European market logged modest y/y growth of 0.09 bcm. North African flows to Italy were higher y/y by 0.14 mcm at 2.4 bcm, while Algerian flows into Spain were broadly flat at 1.4 bcm.
Italy increased LNG sendout by 0.03 bcm (7%) y/y, while sendout in Spain was up y/y by 0.25 bcm (20%), reflecting the relatively full LNG stocks that Spain started the month with given a heavy slate of October imports. LNG sendout in Northwest Europe stepped down 0.06 bcm (6%) y/y to 0.99 bcm, as strong Northeast Asian demand continued to pull spot LNG cargoes away from the region. French ports reexported 0.15 Mt of LNG in November, the highest for the month since at least 2011.