Despite an unusually mild winter in 2023/24, several cold snap events in the Northern Hemisphere led to a surge in gas demand, highlighting the importance of gas supply flexibility for energy security. The report notes that in Asia and Europe, natural gas spot prices have fallen back to pre-crisis levels, while Henry Hub prices in the US have fallen to multi-year lows. These price movements reflect improved supply fundamentals and relatively stable climate conditions.

Asian markets drive demand growth

Asian markets, particularly China and India, are expected to lead global gas demand growth through 2024. The demand for energy in these countries is increasing as a result of continued economic growth and industrialization. In addition, the implementation of energy transition policies and concerns over environmental quality are driving the use of natural gas as a clean energy source.

Demand volatility and supply challenges

Despite the increase in overall demand, the report also highlights the impact of weather volatility on the natural gas market. For example, despite an overall warmer winter in 2023/24, several severe cold weather events led to a surge in demand in key markets in the Northern Hemisphere. In the US, winter storm Heather on 16 January 2024 led to an all-time high daily demand for natural gas of around 400 million cubic meters (mcm), which was 30% higher than the average daily demand for the December-February period.

Future outlook and strategic adjustments

The report predicts that flexibility in the gas supply chain will continue to be an important part of countries’ policies and business strategies as the world focuses on energy security and sustainable development. In particular, the role of natural gas as a backup energy source will become even more critical in markets that rely on climate-sensitive renewable energy generation.

The IEA calls on governments and energy companies to strengthen cooperation to improve the flexibility and adaptability of natural gas supply systems to cope with possible future market volatility and demand changes.

About the International Energy Agency

The International Energy Agency (IEA) is an intergovernmental organization whose mission is to promote global energy security, economic growth, and environmental sustainability. It supports decision-making by governments and businesses through the publication of regular market reports and policy recommendations.