Europe may need €100 gas to secure sufficient winter supply, Goldman Sachs says

Goldman Sachs warns that Europe's natural gas prices need to surge dramatically by December to ensure sufficient inventory for the upcoming winter. With the ongoing crisis in the Middle East, Europe is struggling to compete with Asia for spot LNG supply, driven by soaring prices and the absence of most Qatari LNG term volumes. As Europe attempts to build natural gas inventories in the spring and summer for the following winter, current storage levels are alarmingly low at just 62%, the lowest for this time of year in nearly two decades and well below the five-year average.

The situation is dire, with supply available for purchase tighter than it was in 2022. Despite these challenges, Europe needs to start purchasing gas now or risk facing shortages. The LNG squeeze and supply uncertainty have caused prices to spike, with Europeans competing against Asian gas buyers for limited LNG volume and currently losing the race.

Goldman Sachs predicts that if Middle East energy exports only gradually normalize through 2027, December 2026 TTF prices would likely need to exceed €100/MWh, which is 110% higher than their base case of €50/MWh. Currently, Europe's benchmark natural gas prices, the Dutch TTF Natural Gas Futures, stand at $78.66 per MWh, significantly below the $116 per MWh price that Goldman Sachs believes would encourage faster stockbuilding in the coming months.