Highlights

  • Demand has risen in some major European markets
  • Storage rebuilds are under way in Europe and Ukraine
  • Russian exports to Europe are expected to fall in April
  • Bearish fundamentals have caused hub prices to slide – putting pressure on retailers

Economic overview

Growth could improve in some of Europe’s leading economies in 2016.

Germany’s economy could grow at a stronger rate toward the end of this year, according to an outlook from the European Commission. Annual growth of roughly 1.6% is estimated for Q2, and this is forecast to increase to 2% by Q4. Strong consumer spending, good conditions in the labour and financial markets and increases in public spending are supporting increased growth. Although growth looks set to improve, it is not expected to have a material impact on the prospects of the gas market over the coming months.

Europe quarterly GDP forecast (YOY% change)

  Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Germany 1.5% 1.6% 1.8% 2.0% 2.0%
Spain 3.2% 2.8% 2.6% 2.4% 2.4%
France 0.9% 1.4% 1.5% 1.7% 1.7%
Italy 1.2% 1.3% 1.7% 1.8% 1.7%
Netherlands 1.2% 1.8% 2.4% 2.7% 2.8%
UK 2.0% 1.9% 1.9% 1.9% 1.9%
Source: European Commission, European Economic Forecast

France is also forecast to see improved growth this year. The country’s GDP is expected to expand by 1.4% on an annual basis in Q2, rising to 1.7% by Q4. Consumer demand – supported by low energy prices – is helping to boost expansion, but weak net export levels are expected to cap growth. Gas demand in Q1 fell on an annual basis despite an increase in March. Gas consumption has been rising year on year in April.