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Lower prices and higher demand this winter are set to drive a return to strong growth in global natural gas consumption in 2024, the International Energy Agency (IEA) said on Friday.
This year, natural gas demand is set for 2.5% growth, following a meager 0.5% increase in 2023, the agency said in its latest Gas Market Report for Q1 2024.
The significantly lower natural gas prices – compared to the 2022 highs – are supporting higher demand, as are colder temperatures this winter compared to the exceptionally mild winter of 2022/2023, the IEA said.
The international agency, however, warned that geopolitical risks, rising shipping constraints, LNG project delays, and adverse weather conditions could rekindle market tensions and lead to renewed price volatility.
“Geopolitical uncertainties are the biggest risk factor for global gas markets in 2024,” the IEA noted.
Global gas supply is expected to remain tight in 2024, as it was in 2023, amid expected lower growth in LNG supplies. LNG supply growth is seen at just 3.5% this year, compared to an average growth rate of 8% in the 2016-2020 period, the IEA said. The lower growth would be the result of delays in new liquefaction plants and issues surrounding the availability of feedgas at existing projects that could push back supply growth to 2025.
“We expect to see solid growth in global gas demand this year as prices have come down to relatively manageable levels,” said Keisuke Sadamori, IEA Director of Energy Markets and Security.
“But the speed at which this new demand can be met will be critical, particularly as supplies are tight and substantial new LNG capacity will only come online after 2024.”
Beyond the short-term, the IEA expects demand for all three fossil fuels – oil, coal, and natural gas – to peak before the end of this decade.
The IEA said in its World Energy Outlook 2023 in October that gas demand growth would slow down this decade compared to the decade to 2021 and peak by 2030, under its conservative Stated Policies scenario (STEPS).
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.