An exceptionally mild February paired with strong LNG sendout loosened the European supply-demand balance last month, pushing gas prompt prices down. It was the mildest February since 2014, with HDDs down by 29% y/y compared to an unusually cold February 2018. Meanwhile, weak Asian demand and rising global LNG liquefaction capacity supported a 4 bcm (+200%) y/y increase in European LNG deliveries. But even as prices dropped to levels that encouraged coal-to-gas fuel switching, lower aggregate power demand and strong wind and nuclear generation cut power sector gas demand, easing storage withdrawals and widening an already impressive y/y storage overhang. The European stockdraw totalled 9.6 bcm last month compared to 20.3 bcm a year earlier, widening the y/y storage surplus to 15 bcm by 1 March, from just 4.3 bcm a month earlier.
UK consumption plunged by a considerable 1.5 bcm y/y, mostly on lower res-com demand. Aggregate power demand fell by 2.9 TWh, cutting thermal demand y/y, although coal-fired generation fell more (-2.1 TWh y/y) than gas-fired generation (-0.6 TWh y/y). Wind generation saw a 0.5 TWh y/y uptick. Net pipeline receipts dropped by a massive 2.1 bcm (43%) y/y, mostly because of a 1.2 bcm (96%) y/y drop in IUK imports from the continent. LNG receipts were 1 bcm higher y/y at 1.3 bcm. UK stocks began March 0.15 bcm higher y/y.
Power sector gas demand fell across northwest continental Europe with the exception of Belgium, where another month of nuclear capacity constraints left gas into power broadly flat y/y. Germany had the most significant y/y loss, with gas into power down by 0.25 bcm (28%) y/y. German wind generation was up by a notable 2.9 TWh (35%), and even German solar generation saw a boost of 0.4 TWh (20%) y/y owing to mild, sunny weather. Germany was well-supplied due to a combination of strong Norwegian deliveries and a sharp drop in gross exports, while the rest of the region saw a 1.9 bcm (73%) y/y increase in LNG sendout.
Spain was the only market to see higher power sector gas demand last month (+80 mcm y/y), although mild weather led aggregate gas demand to fall by 0.14 bcm (5%) y/y. Thermal generation rose by 0.13 TWh (6%) y/y, while wind generation slumped by 1 TWh (22%) y/y. Spanish pipeline imports from North Africa fell for the fifth consecutive month, while imports from France were 52% (0.2 bcm) higher y/y and LNG sendout was up by 0.2 bcm (19%) y/y. Total Italian power demand was broadly unchanged y/y last month, but in contrast to Spain, thermal output fell by 1.2 TWh (8%) in conjunction with a 0.4 TWh (52%) y/y and 0.7 TWh (39%) y/y rise in solar and wind generation, respectively. Like Spain, North African deliveries into Italy were partially offset by higher French take through Switzerland, and a 0.54 bcm (126%) rise in LNG sendout.
|European consumption and end-user supply, bcm|
|Source: Country SOs, GIE, Energy Aspects|