(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Gavin Maguire

LITTLETON, Colorado, March 12 (Reuters) - Most of

Europe's largest natural gas consumers cranked gas-fired power

production to multi-year highs in early 2026, raising hopes

among liquefied natural gas (LNG) exporters that the region was

regaining its taste for the fuel.

However, a major slowdown in gas consumption is evident so

far in March, with average gas generation levels across key

consumers dropping by around a third from the month before.

A sharp surge in regional gas costs in the wake of the

outbreak of the U.S.-Iran war on February 28 likely accounts for

at least some of that slowdown.

Above-normal temperatures across much of Central and Western

Europe have also cut regional gas use, as heating demand has

dropped sharply compared with the start of the year.

Further obscuring the demand picture is the current low

level of regional gas inventories, which must be replenished

ahead of next winter and will trigger regular import orders even

if power and industrial gas use stays soft.

This confusing setup is likely to cause major headaches for

the global LNG sector, which is investing billions of dollars in

new export capacity on the assumption that Europe's gas needs

will keep expanding.

Several clean-tech sectors will also be impacted by any

forthcoming swings in European gas use, as renewable power

developers and producers of heat pumps and battery systems all

stand to gain from lower gas use.

To help analysts and industries grappling with this issue,

here are some key data points and trends on Europe's gas use by

utilities and industry that may provide useful guideposts on the

region's true demand potential.

POWER TRENDS

A key aspect of Europe's power markets is that gas

consumption for electricity generation peaks in winter, when

heating demand is highest, and then sags sharply from spring

through autumn.

Between 2019 and 2025, gas-fired output averaged 110

terawatt hours (TWh) per month from October to March, falling to

about 87 TWh a month from April to September, Ember data shows.

That roughly 26% fall in mid-year consumption produces an

uneven burn rate in Europe's power system, even though the fuel

still provides a vital 25% of total electricity output over the

year.

With weather forecasts for western Europe calling for

above-normal temperatures through April, the annual dip in gas

use by utilities is likely already underway and could crimp

overall gas consumption irrespective of market jitters about the

Middle East crisis.

That said, any sudden cold snaps over the spring could

result in fresh bursts of gas demand for heating, which could

further tighten regional fuel inventories.

STORAGE WOES

Europe's current gas stockpiles are hovering at around 27%

of capacity, the lowest for this time of year since 2022.

An upbeat outlook for global LNG export volumes through 2026

had lulled utilities into drawing down stocks over the past

winter, although the recent stoppage of LNG exports from Qatar

has prompted a speedy reassessment of that calculus.

Europe's storage operators must now steadily replenish those

stockpiles ahead of the coming winter while Qatar - the world's

second-largest LNG exporter in 2025 - remains offline.

Historically, Europe's total gas inventories hovered just

below 2,000 billion cubic feet (bcf) by the start of November,

which was sufficient to meet normal heating needs through

winter.

Inventories are currently around 370 bcf, and so must expand

by around 1,600 bcf over the next 235 days or so.

To hit that total, gas storage operators must inject roughly

6.9 bcf per day (bcfd) through November, which is the equivalent

of two large LNG tankers daily.

On average, three large LNG tankers discharged their cargo

per day in Europe in 2025, according to Kpler, so it is possible

for storage firms to secure the equivalent of two tankers per

day for themselves.

However, a majority of Europe's gas supplies are delivered

by pipeline, with around 17 bcfd distributed across Europe from

the likes of Norway, North Africa and Azerbaijan, according to

LSEG.

Tank farms will prefer cheaper pipelined supplies as they

refill storage, but will tap the LNG import market if prices are

attractive.

INDUSTRIAL PIVOT

The health of Europe's industrial base is another key

factor shaping gas demand.

Fertilizer manufacturers, chemical plants, steel mills and a

swath of production lines have all historically been steady gas

consumers.

But collective gas use by businesses has dropped sharply

since Russia's invasion of Ukraine in 2022, and has stayed soft

amid subdued economic activity across Europe.

Europe's once-esteemed car sector embodies the broader

industrial malaise, with Volkswagen, its largest

carmaker, reporting layoffs and a drop in profits this year.

To help lower operating costs and provide greater regulatory

certainty for industry, European policymakers are drafting new

industrial heat rules aimed at helping some sectors replace

volatile gas with cheaper electricity.

Lawmakers are also taking steps to ramp up supplies of

biomethane - generated mainly from agriculture facilities and

municipal waste dumps - to reduce the need for imported gas.

If successful, these measures may reduce total industrial

gas use, although this would create extra electricity demand,

which the power sector would be on the hook to deliver at low

cost.

Any new measures are unlikely to materially affect gas

consumption for several years, so for now gas-dependent

businesses will have little choice but to continue burning gas

when they can afford it and cut output when they can't.

This in turn will likely mean that Europe's total gas use

trends stay choppy for the foreseeable future, even if power and

industrial users gradually reduce their underlying reliance on

gas.

(The opinions expressed here are those of the author, a

columnist for Reuters.)

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