© Reuters. FILE PHOTO: The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly
(Reuters) – Goldman Sachs (NYSE:GS) maintained its $6.80/$5.60 Henry Hub and 89/86 EUR/MWh TTF Sum22/Win22-23 price forecasts after the Freeport LNG outage, noting that the duration of the outage would be key.
“If the outage at the facility lasts less than one month, its net impact on U.S. gas balances is likely mostly offset by the strength recently observed in U.S. gas demand for power” Goldman said in a note dated June 8.
Freeport LNG, which provides around 20% of U.S. LNG processing, will shut down for three weeks due to an explosion at its Texas Gulf Coast facility, raising the risk of global gas shortages especially in Europe.
While U.S. natural gas markets fell as traders anticipated the outage would lower domestic demand on Wednesday, natural gas futures gained on Thursday on record power demand in Texas this week, a smaller-than-usual storage build, rising spot gas prices, low wind power and a decline in gas production so far this month.
“It would take in our view an expected outage longer than two months to support a higher 3Q22 TTF price vs our 85 EUR/MWh forecast. In that scenario, our demand elasticity estimates suggest it would take TTF above 110 EUR/MWh to fully offset that supply loss via demand destruction,” the research note said.