Goldman Sachs raised its forecasts for key natural gas price benchmarks on Wednesday, saying falling supplies and colder weather in Asia and Europe made for a "perfect bullish storm".
It sees European balances even tighter on colder weather revisions in North-Western Europe and a deeper-than-expected drop in NW European Liquefied Natural Gas (LNG) deliveries.
Goldman lifted its Dutch Title Transfer Facility (TTF) gas price forecasts for the rest of the winter, and calendar years 2021 and 2022, to $8.30 per one million British thermal units (mmBtu), $6.72/mmBtu and $6.48/mmBtu from $6.65, $5.63 and $6.03 previously.
The European benchmark Dutch month-ahead gas contract retreated slightly on Wednesday from an over two-year peak scaled in the previous session.
While Goldman expects tightness in coal markets to moderate from the summer, it sees a slower-than-expected return of Colombian coal supplies, implying higher TTF gas prices later.
"We also raise our 2021/22 winter, 2022 summer and 2022/23 winter TTF forecasts to $6.60/mmBtu, $6.30/mmBtu and $6.90/mmBtu from $5.95, $5.85 and $6.75 previously," the bank said.
Supply disruptions, shipping delays and strong LNG demand, supported by heavy nuclear maintenance in Japan and a cold start to 2021 in North-Eastern Asia, have significantly tightened the market, Goldman analysts said in a note.
The bank also raised its Japan Korea Marker (JKM) forecasts for balance of winter for 2020/21, and calendar years 2021 and 2022, to $14.30/mmBtu, $8.73/mmBtu and $7.85/mmBtu from $12.65, $7.56 and $7.37 previously.
Goldman reiterated its expectation for a significant upside to NYMEX gas prices this summer to help correct what it sees as a 2.5 billion cubic feet per day market imbalance through October 2021, and maintained its $3.25/mmBtu 2021 summer U.S. gas price forecast.
