Corrected: Goldman Sachs raises 2027 Europe gas price forecasts on MidEast supply, winter risks

Goldman Sachs group

Yesterday 05:09

Corrects Monday's intra-day low for TTF prices in the last bullet point
Nov 3 (Reuters) - Goldman Sachs has raised its forecasts for 2027 European natural gas prices, saying the outlook remains highly uncertain due to risks surrounding Middle East liquefied natural gas supply and winter weather conditions.
The bank lifted its first-quarter 2027 European natural gas price (TTF) forecast to €74 per megawatt-hour (MWh) from €44 previously, while raising its full-year 2027 forecast to €51/MWh from €32/MWh
Goldman Sachs estimates the market is pricing in a 47% probability that this winter will face persistently low Middle East LNG supply and colder-than-average temperatures
"While some of this upside risk is already priced into the market, we think that the recent drop in Hormuz LNG flows still favours hedging a tight European winter," the bank said in a note on Monday
A departure from average winter temperatures across northwestern Europe can swing regional gas demand to the tune of 12% of storage capacity, Goldman Sachs said
The bank said despite higher-than-expected Middle East LNG supply in October, Persian Gulf LNG exports averaged 33% of pre-war levels. Tanker movements remain volatile and estimated LNG flows through the Strait of Hormuz are still well below the recovery seen in oil flows 
October was the worst month on record for attacks on commercial shipping in the Strait of Hormuz and nearby waterways, according to maritime security incident tracking data
The benchmark Dutch front-month contract at the TTF hub TFMBMc1 plunged more than 10% to an intraday low of €92.60/MWh on Monday as ongoing mediation talks raised hopes for an end to the US-Israeli war even as attacks on ships in the region continue. It traded around €96.85/MWh by 1018 GMT on Tuesday

(Reporting by Sherin Sans in Bengaluru; Editing by Subhranshu Sahu)
((Sherin.Sans@thomsonreuters.com;))