Highlights

  • Demand from the top markets is expected to fall through the end of the year
  • Production is declining from most major producers with swing from Groningen expected to be limited this winter
  • Storage remains high, although net withdrawals have started as the weather has begun to turn colder
  • Lower temperatures have supported hub prices, but major rises have yet to be seen

Economic overview

While growth is still expected in the UK this quarter, the outlook for the major economies on the continent is dim. 

Italy’s economy has contracted again in Q3 and France has recorded annual growth of just 0.4% for the quarter. This will do little to support declining gas markets in Europe during the rest of this year and the start of 2015.

Quarterly annual GDP growth

  Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
France -0.2% 0.7% 0.3% 0.8% 0.8% 0.0% 0.4%
Germany -0.6% 0.1% 0.3% 1.1% 2.3% 1.4% 1.2%
Italy -2.4% -2.2% -1.8% -1.2% -0.3% -0.3% -0.4%
Spain -1.9% -1.6% -1.1% -0.2% 0.5% 1.2% 1.6%
United Kingdom 0.8% 1.7% 1.7% 2.7% 2.9% 3.2% 3.0%
Source: OECD

The latest forecasts for the UK’s economy suggest growth could slow in 2015. The UK economy grew by 3% on an annual basis in Q3 and is expected to increase in size by 3% in 2014 as a whole. However, growth could slip to 2.5% in 2015. This will not support gas market expansion next year. 

Germany’s economy grew by 1.2% on annual basis in Q3, down from 1.4% in Q2. Data for September shows factory orders rebounded less than hoped for during the month after a 5.7% fall in August. Weak output and sluggish demand for exports will continue to dampen gas demand in the country for the rest of 2014.