On Monday, a German official announced they would reduce natural gas consumption targets at the European Union (EU) level.
Natural gas contracts for April delivery declined by -0.14% to $2.77 per metric million British thermal units. The projection was for March 01’s Asian afternoon session.
As the official said, the decrease in consumption was aimed at helping fill storage facilities to prevent further price hikes.
According to analysts, they agreed to lessen natural gas demand between August 2022 to March 2023 by 15.00%. As a result, the EU’s usage from August last year to January was lower by 19.30% than the average from the same period in 2017/22.
There is no room for complacency for Sven Giegold, the German economy ministry state secretary. It is targeted at ensuring European gas supply security.
He said that these efforts would guarantee to fill storage tanks and prices will not aggressively surge.
Moreover, he added that they must keep paying attention to their natural gas usage and continue increasing their saving efforts. Therefore, the German government is committed to more ambitious fuel decrease targets at the EU level.
Also, since healthy inventories and demand restrictions took place, prices have weakened, based on an expert.
This year, countries in the EU are required to supply inventory facilities to 90.00% of capacity by November 01.
Russian Impacts Wavered Natural Gas Markets
According to the International Energy Agency’s gas market report, natural gas markets continue to tighten worldwide. It came despite a decline in global consumption by 1.60% in 2022.
Demand forecasts are to remain flat in 2023. Furthermore, the outlook is bound to go to a higher level of uncertainty. This is due to Russia’s future actions and the economic impacts of unsteady energy prices.
However, European natural gas prices and Asian spot liquified natural gas (LNG) costs spiked to record highs last year. It was due to canceling the sharp plunges in Russian gas supplies through LNG imports in Europe. Also, China’s fuel usage plummeted by 1.00% in 2022 amid lower industrial activities.