Why Goldman Sachs estimates gas prices will more than halve

European countries have finished building up their large gas stocks for the winter, which will lead to a drop in the price which could fall back below 100 euros per MWh according to the American bank. Will the winter be less harsh than intended? A few weeks before the first frost, the tension falls on the gas market. Despite threats to cut the Russian tap, the price on the wholesale market has started to fall again after the peak reached at the end of August. On the delivery contracts for 2023, the price of natural gas is indeed fell from 297 euros per MWh to less than 200 euros in recent days. A price that is still high when you understand it at 85 euros a year ago but which now seems to be on a downward trend. This is what Goldman Sachs bank estimates on Tuesday, which in a note assures that European countries can withstand Russia’s gas cuts this winter. According to the analyst, the supply problems may have been “successfully resolved” and he now anticipates prices which could fall by more than half this winter. expected a price of around 213 euros per MWh for the winter, its new forecast shows a price below 100 euros by the first quarter of 2023. While the Russian Gazprom has reduced these supplies in recent months In the direction of Europe, European countries rushed to fill their storage facilities, which drove up the price of gas. that storage facilities will be 90% full on average by the end of October, more than the 80% initially targeted by EU countries.”This is the puzzle that Europe has successfully resolved over the past year, believes the analyst. Thanks to a combination of lower gas demand in Europe as well as among liquefied natural gas buyers elsewhere in the world, leading to above-average inventory build-up. is not too extreme in terms of weather. The U.S. bank thus expects inventories to remain more than 20% full by the end of March next year.”This, in our view, will set the stage so that the sense of urgency to depress demand that we currently see is gradually replaced by a sense of relief from the market for having weathered the winter,” analysts say. While Russia is down to just 9% the continent’s gas supplies, the EU would have given up imposing a cap on the price of gas from Vladimir Putin’s country. of the latter is the result of a complex calculation which takes into account not the real cost of production but the marginal cost of the last MWh produced on the network. However, with reduced electricity production capacities and strong demand, this marginal cost of the last MWh will be fixed by the production of gas-fired power plants. A drop in the latter would therefore automatically lead to an equivalent drop on the electricity market.