Gas production curtailment in Israel due to the ongoing conflict is likely to tighten global balances, but the impact on European gas prices is marginal for now, Goldman Sachs said.
"Tightening of global LNG balances as marginal for TTF prices for now, as its net supply impact to NW Europe, the region that sets the TTF price, is smaller than the total size of the disruption," Goldman Sachs said in a note dated Monday.
Oil and gas prices were boosted around the world on Monday due to the fresh conflict in the Middle East and strike action by workers at liquefied natural gas (LNG) export plants in Australia. NG/EU
Mild weather so far this month has offset the scale of this potential LNG supply disruption, it added.
Goldman said that the curve move, with Winter 23-24 and Summer 24 TTF up 8% and 6% at $47 Euros per MegaWatt hour, (MWh), in line with its 48/45 EUR forecast, is thus far justified.
However, the bank sees risks to European gas prices skewed to the upside, given the uncertainty around the duration of the gas production disruption, and with added uncertainty regarding the geopolitical ramifications of the ongoing Middle East conflict.
We continue to recommend a long Feb24 TTF position and that energy consumers hedge at least their Win23-24 exposure," it said.
(Reuters - Reporting by Anjana Anil & Brijesh Patel;Editing by Bernadette Baum)
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