European gas, power demand forecast ‘2011

LONDON: Mild weather and economic weakness mean European natural gas and power demand will be weaker than previously expected this year, Societe Generale said in a report on Friday.

The bank cut its demand prediction for gas to a 6 percent fall year-on-year from an earlier forecast for a 4 percent decline following a 9.2 percent drop in the first six months of 2011.

That drop was almost as deep as the 9.4 percent decline in 2009, when global economic crisis had a major impact on energy use.

It said higher gas prices and greater use of renewable energy would also have an impact.

In 2010, demand rose sharply in part because of unusually cold weather and as consumption recovered from a very low base.

Societe Generale also lowered its expectation for Europe's electricity demand, saying it would fall by 2 percent rather than the one percent year-on-year rise it had previously forecast.

For the first half of the year, electricity demand fell by 2.2 percent.

Copyright Reuters, 2011