European LNG demand due to attractive prices in Europe compared to Asia, and the increasing importance of Nord Stream.
Energy Insights’ EU PipeFlow, which tracks flows in major European pipelines and monitors levels of natural gas storage, has uncovered some critical insights into how these developments impacted European gas flows, storage levels, and infrastructure utilization.
Unexpectedly, Europe was one of the strongest sources of demand growth. This occurred despite the strong political and social reactions to Dieselgate—the 2015 scandal that found that automakers were manipulating test data to hide the fact that diesel produces more emissions than is allowed by current standards. For the first 10 months of 2017, European demand for diesel in all uses actually grew by 2.4% over 2016. This was similar to the growth rate seen following the drop in global crude prices in 2014 when lower fuel retail prices and rising diesel car sales stimulated demand.
Growth in economic activity seems to explain most of this increased demand. Preliminary data shows average growth for the first three quarters of 2017 was the most productive for the Euro area since 2007 (before the global financial crisis). A combination of improving labor markets diminished political uncertainty, and favorable borrowing conditions have supported domestic consumption in the region.