22 January 2020
- The Supply Index shows extremely low values (>1000GWh versus an average of 1500GWh). While this is technically indicating tightness, the index itself is often a function of demand. Another indirect indication that demand is currently very weak comes from the storage index, which is still at its seasonal peak (i.e. the destocking rates are now close to zero). While LNG volumes have gradually declined during the first 3 weeks of the year, a new pick up is expected to materialize from week 5.
- As anticipated in the supply commentary, demand will be very poor. The predicted value is just above 35GW versus an historical average of >37GW. Temperatures will remain comfortably above the average of the period, particularly over southern England. This is due to the elongation of the jet-stream from the mid-latitude Atlantic into northern Europe. As a result, winds will also gradually increase (from the end of week 4), further reducing the gas demand.
- On the macroeconomic side, demand looks similar to its continent counterpart. The PMI has been trending below 50 base points and is currently at 47 (slightly higher than the main European economies). A similar trend has been observed for the BE and Industrial production Index, both of them remaining flat over the past few months. The Energy Intensity Index is expected to trend lower in the short-term (week 5).