World: Commodities - EIU's monthly natural gas outlook

September 8th 2023

Demand

We expect global natural gas consumption to grow by 3.1% per year on average in 2024-25 as lower prices trigger a recovery in demand after two years of contraction. Our forecast assumes that there will be no clear resolution of the Russia-Ukraine conflict and no prospect of a return to pre-war flows of Russian pipeline natural gas to Europe. We forecast that demand will contract by 0.3% in 2023, following a 2.9% decline in 2022. A modest increase in Chinese consumption will be insufficient to offset lower consumption elsewhere in Asia and in Europe. On balance, we expect the El Niño to increase demand, as it makes extreme weather events more likely, pushing up demand for natural gas for both heating and cooling.

Supply

We expect global natural gas production to rise by 2.8% on average in 2024-25 as high prices and EU efforts to replace Russian supply stimulate global upstream gas investment. Global natural gas production declined by 0.4% in 2022, mainly owing to Russian production contracting after pipeline exports to Europe were shut off. We estimate that production will increase by 1.8% in 2023, mainly owing to strong US output. The main sources of increased production over 2023-25 will be North America, Norway, the Middle East, North Africa, Azerbaijan, Turkmenistan, China, Australia and Mozambique.