Goldman Sachs lifts 2027 European gas price forecasts on supply and winter risks

what happened

Reuters reports that Goldman Sachs has sharply raised its European natural gas price outlook for 2027. The bank lifted its first-quarter 2027 TTF forecast to €74 per megawatt-hour from €44, and its full-year figure to €51/MWh from €32/MWh. The uncertainty stems from Middle East LNG supply and winter temperatures, and Goldman estimates the market is pricing a 47% chance that supply stays persistently weak and winter runs colder than average.

In a note on Monday, the bank said part of that upside is already priced in, but the recent slump in LNG flows through the Strait of Hormuz still favours hedging against a tight European winter. It noted that a shift from average temperatures across northwestern Europe could move regional gas demand by an amount equal to 12% of storage capacity. Persian Gulf LNG exports averaged 33% of pre-war levels, even though October supply beat expectations, and that month was the worst on record for attacks on commercial shipping in Hormuz and nearby waters.

Despite this backdrop, the front-month TTF contract fell more than 10% to €10.77/MWh on Monday. Mediation talks fuelled hopes of ending the US-Israeli war, even though attacks on ships in the region continue.

why it matters

For gas traders the signals point in opposite directions. Higher forecasts and supply risks support the case for an expensive winter, while progress in talks weighs on prompt prices, which is why TTF fell on Monday despite the upgrade.

market impact

TTF gas: LNG supply risks support prices, while hopes for peace talks weigh on them

• ↔TTF gas mixed — LNG supply risks support prices, but peace-talk hopes push them down

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