Europe gas and power markets short-term outlook Q4 2018

Gas demand to the end of 2018 will come in almost 10 bcm below 2017 levels as coal-to-gas switching remains elusive in some markets, despite strengthening coal and carbon prices supporting gas into power. This has been due to a lack of supply flexibility in Europe's gas market, which has held gas prices at the upper end of the coal-to-gas switching range. At 114 bcm, Norwegian flows to Europe for the full year 2018 are expected to be shy of 2017's record. Russian flows, by contrast, are forecast to surpass last year's record, touching 200 bcm for the year. LNG imports will be about 3 bcm higher in 2018 compared to a year earlier and supply availability to Europe is expected to grow through winter 2018/19. Rising fuel and carbon prices continue to provide strong support to power prices, resulting in prices being on a level with the previous outlook.