Natural gas demand in the EU and UK rose in July compared to June, but inventories increased at a faster clip as Europe is moving to stockpile gas ahead of the winter, the latest data by the Joint Organizations Data Initiative (JODI) showed on Wednesday.  

EU and UK natural gas demand rose by 1.3 bcm from June to 200.1 bcm in July, according to the JODI data shared by the Riyadh-based International Energy Forum (IEF).

Globally, natural gas demand rose by 12.9 bcm in July from June, settling at higher than the 5-year seasonal average.

Natural gas inventories in the 45 countries that voluntarily update their self-reported data to JODI jumped in July by 9.7 bcm month-on-month, recording new historical levels in comparison to the last 5-year seasonal period. 

In the EU and the UK, gas inventories increased by 7.1 bcm month-on-month and by 0.38 bcm year-on-year, settling at 7.6 bcm higher than the 5-year seasonal average, the data showed.

EU storage levels were 93.4% full as of September 16, according to data from Gas Infrastructure Europe. This is reassuring for Europe ahead of the winter heating season, but gas in storage cannot cover the entire winter consumption. Therefore, Europe needs fairly steady supply of gas from Norway, now its top gas supplier, and LNG cargoes.

In terms of output, global natural gas production rose in July by 4.7 bcm month-on-month but was down by 1.2 bcm year-on-year. The annual decline was driven by the United States, Egypt, Indonesia, the United Kingdom, and Canada.

Earlier this year, when the prices hit multi-year lows at the end of the winter and early spring, U.S. natural gas producers and pipeline operators acknowledged there was an oversupply hanging over the market. But they believe that gas will continue to be in demand domestically and internationally for decades to come.

By Tsvetana Paraskova for Oilprice.com

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