European Gas Prices Set for Continued Rise This Winter, Goldman Sachs Warns

The European gas prices are expected to continue rising this winter, according to Goldman Sachs. The firm has raised its forecast for European LNG prices in Q4 to €70/MWh from €53/MWh due to demand destruction caused by the recent rally.

If Persian Gulf LNG exports improve over the course of the winter and normalize by early next year, the current rally may be enough. However, if exports remain low, prices could rise above €100 a megawatt hour in peak winter to destroy even more demand outside of Europe.

The heating season in Europe begins in November, and temperatures can significantly impact gas storage inventories. If the winter is colder than average, prices could rise by 75%, while a warmer-than-average winter could lead to a 30% drop in prices.

Goldman Sachs expects natural gas prices to decline to €19/MWh on average in 2030-2035 due to oversupplied global LNG balances. However, this outlook depends on the Strait of Hormuz remaining open and is not reflected in current market expectations.