Europe's Winter Gas Prices May Need to Hit 100 Euros/MWh, Goldman Sachs Warns
Translated from Romanian, summarized and contextualized by DistantNews.
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- European natural gas prices may need to exceed 100 euros per megawatt-hour in December to ensure sufficient winter reserves, according to Goldman Sachs analysts.
- Recent price increases and competition for liquefied natural gas, particularly with Asia, are creating supply challenges for European buyers.
- Analysts predict that without normalized Middle East energy exports, TTF prices could surpass 100 euros/MWh by December 2026, significantly above baseline forecasts.
European natural gas prices might need to surge past 100 euros per megawatt-hour in December to build adequate winter reserves, Goldman Sachs analysts warned. Even recent gains on the TTF benchmark in Amsterdam may not be enough to divert sufficient liquefied natural gas from Asia to Europe, especially if Middle East supply disruptions continue into next year.
Analysts Samantha Dart and Laura Cyr noted that current prices are insufficient for Europe to refill its gas storage and navigate the winter. They project that if Middle East energy exports only gradually normalize by 2027, TTF prices could exceed 100 euros/MWh by December 2026. This forecast is 110% higher than the bank's baseline scenario, which anticipates a price of 50 euros/MWh for December.
In a scenario where Middle East energy exports normalize only gradually until 2027, we estimate that in December 2026, TTF quotes will likely have to exceed 100 euros for a MWh.
The situation is compounded by Europe's lagging gas storage refill process this summer. At the current pace, storage levels in northwestern Europe are expected to reach only 51% by the end of this month, falling short of Goldman's base case by 3.4 percentage points. This comes as competition with Asia for limited LNG supplies intensifies, exacerbated by reduced gas shipments through the Strait of Hormuz due to geopolitical tensions.
However, a potential mitigating factor could be weather patterns. While Goldman Sachs forecasts near-average winter temperatures, Rystad Energy AS suggests a "super" El Nino could lower gas demand by at least 2 degrees Celsius. Such a meteorological shift might counteract the low storage levels, offering some relief to the European energy market.
Current prices will not be enough for Europe to replenish its stocks and get through the winter.
DistantNews Editorial
Originally published by Adevฤrul in Romanian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.
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