(Bloomberg) -- European natural gas prices next summer may be 20% lower than currently estimated thanks to a decline in demand from power plants and ample supplies in storage, according to consultant Wood Mackenzie Ltd.

The region is heading into winter with stockpiles above the seasonal norm, a buffer against any short-term disruptions. There’s also been a drop in gas use for power, with renewables gaining market share, nuclear output rising and economic pressures weighing on industrial and household consumption. 

“The European gas sector looks set to see a fall in gas demand that will have a knock-on effect for prices next year,” Wood Mackenzie said Wednesday in a report. “Gas in power is expected to decline by 12% year-on-year in 2024, a similar decline to that of 2023.”

European gas prices have been volatile this year, reacting to any threats to global flows. Deliveries from the continent’s top supplier, Norway, have been closely watched in recent months amid prolonged maintenance outages. Strikes at liquefied natural gas facilities in Australia have also kept traders on edge.

“The Norwegian maintenance schedule being extended could have had a serious impact if storage levels were not so high,” said Mauro Chavez, a research director at Wood Mackenzie. “And while the strikes in Australia will ripple across the global LNG market, it is more likely they will be short-lived, limiting the implications on Asian and European market balances.” 

Read More: European Gas Retreats on Expectations of Rebound in Norway Flow

Still, the firm expects a tighter market in 2025, when Russia’s gas-transit deal with Ukraine expires. In addition, global LNG supply additions will be gradual and Asian demand for the fuel will increase, limiting volumes available for Europe, Chavez said.

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