Goldman Sachs raised its European natural gas price forecasts, citing an uncertain outlook for Middle East LNG supply and winter weather. Its forecasts still sit below market forwards, and the bank says risks to its 2027 projections remain skewed to the upside.
Goldman Sachs lifted its first-quarter 2027 TTF forecast to €74 per megawatt-hour from €44, and its 2027 average to €51 from €32. The bank flagged a still highly uncertain outlook for Middle East liquefied natural gas supply and winter weather.
What drives the higher forecast
The increase reflects a subjective 45% probability of a low-supply winter for Middle East LNG, worth €26 in the first quarter, analyst Samantha Dart said. A small cold-weather risk component adds €4.
The forecasts nonetheless remain below forwards, at €92 for the first quarter and €69 for summer 2027. Goldman said the first-quarter forward implies a 47% market-perceived probability of a very tight scenario.
TTF prices fell sharply Monday from Friday's €104 close as headlines pointed to a possible diplomatic attempt. That partially reversed earlier concerns about military escalation after the U.S. midterms, while short-range weather models turned more neutral.
Gulf export recovery sets the base case
In Goldman's base case, Persian Gulf LNG exports climb gradually to an operating maximum of 83% of normal by February. Qatar damaged 17% of its export capacity earlier this year and has guided to a multi-year repair.
Exports averaged 33% of pre-war levels in October, 13 percentage points above Goldman's base case, though recent days have seen lower flows through Hormuz.
Scenarios range from €45 to €150
If exports stay at 25% to 30% of normal through March and the winter in northwest Europe runs one standard deviation colder than average, Goldman estimates first-quarter TTF would approach €150. A warmer winter and improved supply would drop it to €45, which would essentially halt European competition for LNG with the rest of the world, Dart noted.
Dart said some of the upside risk is priced in, but that the recent drop in Hormuz LNG flows still favors hedging a tight winter through first-quarter 2027 TTF call spreads.
Source: Investing.com
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