Analysts at Goldman Sachs have come up with a prediction that the natural gas prices in Europe could fall by 30% in the next few months. The reason behind this analysis is some stability on the supply side.
The main benchmark for Europe's gas price is TTF or also known as Dutch Title Transfer Facility. Currently, the TTF is around 120 euros/Mwh, and if we consider the prediction of Goldman Sachs, the new price should be around 85 euros/Mwh.
Considering how a lot of analysts are actually of the view that natural gas prices could rise further in the coming months, it seems that Goldman Sachs has a different view. Currently, Europe is facing a major energy crunch due to the Russian invasion of Ukraine and the shutdown of Russian gas. As a result of all of these things, the price of energy in Europe actually peaked at 340 euros/Mwh.
So although prices of natural gas cooled off recently, the experts at Goldman Sachs are pointing towards even more downside.
If we look at the factors leading to a drop in natural gas prices, there are quite a few... For starters, Europe has already filled its gas storage for the coming winter season. On top of that, the temperature during the fall season is mild, which means that the heavy usage of natural gas will be further delayed. And last but not least, the EU is also facing an oversupply of LNG from various suppliers.
Looking ahead, around 60 vessels (ships) are also on standby to unload the LGN cargo, which is expected to further drop the energy prices in Europe.
According to statistics, the natural gas storage levels in the EU are around 94% which means that they are almost full. But despite the stable supply of natural gas, European leaders are still under pressure to continue arranging supply for the medium term.
So for now, the most probable value for natural gas in Europe is around 85 euros but it is expected to pick up during the summer season. So by the end of July, the price is expected to be somewhere around 250 euros per MWh.