European Gas Prices May Stay Elevated This Winter Amid LNG Disruptions

European natural gas prices may remain elevated this winter due to ongoing disruptions in Persian Gulf LNG exports, according to Goldman Sachs. The bank expects prices to average €70/MWh in the fourth quarter, up from its previous forecast of €53/MWh.

This higher forecast is driven by the need for demand destruction caused by the recent rally to continue through the coming months, said Samantha Dart, co-head of Global Commodities Research at Goldman Sachs. Persian Gulf LNG exports remain at only around 15%-25% of pre-war levels.

The outlook will also depend heavily on temperatures as Europe's heating season approaches in November. Goldman Sachs estimates that winter temperatures can alter natural gas demand by around 12% of storage capacity.

Winter weather could amplify price swings, with a cold winter potentially pushing prices up by around 75% and a warm winter reducing them by about 30%. Gas storage in Northwest Europe has been filling more slowly than expected, with the bank estimating that it will be only 19% full by the end of March 2027.