Goldman Sachs: Gas Prices in Europe May Rise to €150/MWh by Year-End

According to Goldman Sachs' estimates, the dynamics of European natural gas and liquefied natural gas (LNG) prices will mainly depend on LNG exports from the Middle East and weather conditions. The bank believes that the risks are tilted toward higher prices.

Goldman Sachs forecasts that Europe's benchmark TTF gas price could rise to €150/MWh by the end of the year, though this would require several specific conditions to be met simultaneously.

Under the bank's scenario, LNG exports from the Persian Gulf during the winter period should not exceed 25% of normal volumes. In addition, winter temperatures should be at least one standard deviation below average, which would increase demand for gas.

Goldman Sachs estimates that the realization of only one of these factors would not be sufficient to reach the €150/MWh level. Such a scenario specifically requires the simultaneous occurrence of restricted supply from the Middle East and a colder-than-average winter.

According to the bank's analysis, the future direction of European gas prices will continue to depend on these two key factors. The volume of LNG supply from the Persian Gulf region will determine the supply pressure on the market, while weather conditions will determine the level of gas demand during the winter period.

Accordingly, if LNG exports from the Middle East remain limited and the winter turns out colder than expected, the risk of a significant price increase in the European gas market will persist.