Goldman Sachs gas price forecast and its mysterious forecasts against the current.
The famous investment bank Goldman Sachs estimated on Tuesday that gas prices will be halved by the end of the year in Europe. This optimism contrasts with the gloomy scenarios of widespread increases in energy prices this winter. But in the eyes of some economists, the analysis seems a bit simplistic.
Oyez, oyez: gas prices will fall by half in Europe by the end of the year, Goldman Sachs assures. A surprising piece of good news, to say the least, that the famous American investment bank develops in an analysis note published on Tuesday, September 13th. Europe would even have "solved the puzzle of the price of energy", argues the establishment.
Goldman Sachs analysts predict, in fact, that the gas tariff on the European market will rise from "215 euros/Mwh (megawatt-hour) at the end of this summer to less than 100 euros/Mwh in the first quarter of 2023".
Goldman Sachs gas price forecast
Enough to feed the hopes of European companies and households not to see their electricity bills skyrocket when winter comes. In the European Union, the price of electricity is set according to a clever calculation that leaves a large place to the cost of gas production, reminds BFMTV. If the tariff for this precious hydrocarbon collapses as planned by Goldman Sachs, "this would imply that the black scenarios of an explosion in electricity bills this winter should not occur," confirms Lawrence Haar, specialist in energy economics at the University of Brighton.
Which is also enough to arouse dubious pouts. Goldman Sachs is a lone wolf when it comes to good energy news. "I was very surprised. No one else in this sector anticipates such a price evolution," admits Michael Bradshaw, an energy specialist at the University of Warwick. The discussions around gas and electricity prices instead revolve around ways to protect the economy against an inevitable increase in energy tariffs in Europe. A concern that was even at the heart of the speech, Wednesday, September 14, by the President of the European Commission, Ursula von der Leyen. Also in France, Elisabeth Borne, the Prime Minister, assured that the government would limit the increase in tariffs to 15% in 2023.
Within Goldman Sachs itself, the tone of this new analysis note must have surprised more than one. Just a week ago, the same bank published another article predicting that prices would remain high on the Old Continent.
Goldman Sachs gas price forecast data
So where did this jacket flipping come from? "We know that banks can tend to publish biased analysis notes in favor of their own investment strategy. So this is a possibility that should not be ruled out," admits Lawrence Haar. But, in this case, this expert believes that this analysis note is based on a "rational" analysis of the situation.
Goldman Sachs bankers have noticed a surprising evolution in the European gas market, both from the point of view of demand and supply. On the one hand, "European gas storage facilities should be 90% full in October, which is more than the 80% that Brussels considers necessary in order not to have a shortage during the winter," emphasizes Christopher Dent, specialist in energy policy issues at the University of Edge Hill, north of Liverpool.
This race to prevent Moscow's closure of the taps of the Nord Stream 1 and Yamal pipelines from depriving Europe of gas was carried out successfully "by managing to buy more LNG gas [liquefied natural gas, editor's note] than was planned," notes Christopher Dent. In other words, the major LNG exporting countries (Qatar, Malaysia, Australia or the United States) have increased their deliveries to Europe.
Goldman Sachs gas price forecast bank
On the other hand, Goldman Sachs bankers "anticipate a destruction of gas demand greater than expected", notes Christopher Dent. Between the measures in favor of energy sobriety and an effort to make more use of renewable energies, the European economy should be less dependent on gas. And when there is a stronger supply than expected and a falling demand, the result is usually a drop in prices.
But for many observers, it is a "simplistic and very short-term analysis of the situation", says Nicolas Goldberg, energy expert at Colombus Consulting. First of all, the faith placed by the Goldman Sachs bankers in the effectiveness of the calls for energy sobriety "is very optimistic and nothing says that this will be strictly respected", specifies Christopher Dent.
In addition, the analysis note makes no mention of the weather, so "that it is a determining factor to have an idea of the evolution of prices," says Nicolas Goldberg. If it is very cold and there is no or little wind, for example, there will be less energy from wind turbines and households will tend to heat more. Two factors that could then have a significant impact on gas demand and therefore on the price.
Goldman Sachs gas price forecast 2022
"If Goldman Sachs has a reliable weather repository capable of predicting the weather between now and the beginning of next year, I am a taker and I could start to believe in these projections," says Nicolas Goldberg.
This is all the more unlikely because "global warming has made it even more difficult to exercise weather forecasts, which makes all the more fragile all the estimates of evolution of gas prices", adds Christopher Dent.
Not to mention that the price of liquefied natural gas can fluctuate due to factors that have nothing to do with supply and demand in Europe. "If, for one reason or another, Asia needs more LNG gas, they will offer a higher price to secure their stock, which will force Europe to align with these prices," explains Michael Bradshaw.
Goldman Sachs gas price forecast statements
"The price of gas is the result of a much more complex alchemy than the conclusions of the analysis note published by Goldman Sachs suggest," says this expert from the University of Warwick. However, he does not rule out that this scenario of a drastic fall in prices will come true, but "the chances are slim".
And then, it would not necessarily be the panacea for the European economy. "It would obviously be good for the consumer, but not necessarily for the other players in the economy," says Michael Bradshaw. First of all, if prices fall drastically, the operators of gas storage facilities will have a very painful winter because they will have bought the precious hydrocarbon at a gold price this summer.
Then, "the references to the destruction of demand made by Goldman Sachs are a polite way of emphasizing that part of the activities that required gas [it is not only used to produce electricity, but also, for example, for the manufacture of fertilizers or in the refining process, editor's note] no longer exist", emphasizes Michael Bradshaw. Again, this is not good news for economic activity.
But above all, "we may have managed the gas supply for this winter, but what about the next few years?", emphasizes Nicolas Goldberg. How will we replenish stocks next summer if Russia continues not to supply gas to Europe? Indeed, "there is simply not enough liquefied natural gas on the market to compensate for the loss of Russian supplies," says Michael Bradshaw. In other words, Europe may have partially solved the puzzle of the energy price this year, but surely not that of its dependence on Russia.
# Goldman Sachs gas price forecast #
