Will drop in gas prices in Europe start to stoke demand for gas in Asia ?

One of the major worst consequences of the Russia - Ukraine war was the suffering of people of Europe during the winter due to high gas prices. Soaring gas prices stoked a cost of living crisis last year and fed into high inflation as Russia weaponized its gas supplies to Europe in retaliation for western support for Ukraine, cutting off the majority of exports.

But since then the relatively mild winter, reductions in demand and successful efforts to boost supplies from alternative sources have left extensive gas in storage as the end of winter approaches.

But, now European countries have?learned how to live without Russian natural gas. Maybe that is why European natural gas prices fell to 18 months low. The price of European natural gas has fallen below €50 per megawatt hour for the first time in almost 18 months.

European gas prices have fallen as much as 85 per cent from their peak of more than €300/MWh in August 2022, when Russia’s deep cuts in supplies to Europe after its full-scale invasion of Ukraine sparked concerns of possible blackouts.

The fall in gas prices has also stoked expectations that EU countries and the UK may only experience a mild recession this year, or could entirely avoid an economic contraction.

Industrial gas demand in Europe has fallen about 20 per cent in the past year without a significant drop in manufacturing output because of greater efficiencies and fuel switching, while long-range weather forecasts were now predicting a relatively mild March that should reduce demand for heating.

The drop in gas prices in Europe may start to stoke demand for gas in Asia, particularly as China’s economy reopens.