High gas prices to hit demand in 2022: IEA

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Demand for natural gas is expected to fall sharply in Europe and slow in Asia this year as prices have rocketed to record heights, the International Energy Agency said Monday.

Gas demand rebounded last year as the world economy recovered from the COVID-19 pandemic and restrictions were eased, while an unusually cold winter also drove up consumption, the Paris-based IEA said.

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“Supply did not keep pace which, combined with unexpected outages, led to tight markets and steep price increases, putting the brakes on demand growth in the second half of 2021,” the agency said in a report.

Consumption grew by 4.6 percent last year, more than double the decline experienced as the pandemic emerged in 2020, said the agency, which advises governments.

How demand will fare in the short-term will depend on the weather during the northern hemisphere’s heating season, the report said.

“Assuming normal temperatures, growth of the natural gas market is expected to be slowed by higher gas prices and softer economic expansion, while supply tensions may ease as offline capacity gradually returns,” the IEA said.

Global demand is expected to grow by a more modest 0.9 percent this year to stand at 4.1 trillion cubic meters after surging by 4.6 percent in 2021.

Global production, meanwhile, is expected to increase by 1.6 percent to 4.2 trillion cubic meters.

Demand is expected to fall by more than four percent in Europe while it would slow in Asia, from a “robust” seven percent in 2021 to five percent this year.

Fears of a potential Russian invasion of Ukraine could further fuel Europe’s already sky-high energy prices.

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