OREANDA-NEWS. France's gas imports continued their downward slide in January, falling to 35.7TWh — the lowest for any January since 1996, according to France's energy ministry.

Net imports fell as exports to Switzerland at Oltingue more than doubled in January compared with a year earlier. From Switzerland the gas is transported on to Italy, which has been importing less gas from the east, as Ukrainian demand for gas from the EU has supported Austrian hub prices and contributed to pipeline congestion in central Europe. Italian supply was also tightened by Russian deliveries falling at least intermittently below nominations between early September last year and early March.

French LNG sendout, which had stepped higher in November and December, fell back again in January. Algerian cargoes from Skikda halted in early January as operations at the liquefaction plant halted for maintenance early in the month.

But French gas demand stepped higher both month on month and year on year. January temperatures this year were 2.2°C lower on average than a year earlier. But even adjusting for the calendar and the weather conditions, demand was higher in January than in December or a year earlier. Power-sector gas demand and industrial consumption rose year on year, even after correcting for the weather, while residential demand was marginally lower.

With net imports lower and consumption higher, France relied more heavily on storage withdrawals to cover demand. The January stockdraw rose to about 30.4TWh — the strongest for any January since 2010, although stocks at the end of the month were only slightly lower than a year earlier, France's energy ministry said.

As well as the stronger withdrawals, France relied on larger Norwegian and spot imports to cover higher January demand.

France's imports from Norway and spot gas supplies were above the January average for the last five years, although spot imports were lower year on year. But France's Algerian, Russian and Dutch gas imports were all below the five-year average.

Shippers have an incentive to take more oil-indexed gas such as long-term supply from Algeria and Russia later in the year. With oil prices still far lower than a year earlier following their slide through the second half of 2014, oil-indexed gas prices are set to be at their lowest this summer since 2010.

Drawing more heavily on storage inventories ahead of the summer injection season allows importers to use the flexibility in their supply contracts to dial down their receipts during the first quarter, and maximise them in the summer, when they can fill the cleared space with lower-priced supply.