European Gas Market Supply & Demand: Winter Outlook 2023/24
European gas balances look comfortable heading into the winter on the back of record storage levels. European hub prices have stabilized since April and absent a major supply outage, 100 Bcm of storage stocks at the start of December means there is no prospect of any physical shortage this winter. We expect gas demand to remain subdued through the winter, despite some apparent recovery in industrial and commercial consumption in the second half of 2023. The main drivers of this subdued demand will be low gas use in the power sector given the combined impacts of the weak macroeconomic outlook; a recovery in French nuclear output; and higher hydro and other renewables generation. But limited supply flexibility means there are risks to this outlook and most of those are bullish price. A surge in European gas demand driven by colder weather or curtailment of LNG supplies would spike storage withdrawals, lifting prompt gas prices and requiring higher storage fills in mid-2024.