Goldman Raises European Gas Forecast to €74/MWh in First Quarter of 2027

Key Facts

Goldman Sachs on Nov. 3 raised its forecast for the European TTF gas price in the first quarter of 2027 to €74 per megawatt hour, from €44 in its previous estimate, and lifted its average forecast for the full year to €51 from €32. The revision reflects the bank’s assessment of the risk that liquefied natural gas supplies from the Middle East remain disrupted, alongside the possibility of a colder-than-usual winter in Europe. The bank estimated that the market is pricing in a 47% probability of both factors coinciding this winter. That scenario leaves the balance of the European market more exposed to volatile LNG flows and temperature-driven demand. In a note on Monday, the bank said the decline in LNG flows through the Strait of Hormuz “still favors hedging against the risk of a supply-scarce European winter,” although some upside risks are already priced in.

Gulf supplies remain well below pre-war levels, although LNG flows from the Middle East in October were higher than expected. Average LNG exports from the Persian Gulf reached 33% of pre-war levels during the month, according to a Reuters report. Goldman noted that tanker traffic remains volatile and that estimated flows through the Strait of Hormuz have not recovered to the extent seen in oil flows. The shipping record adds pressure to supply estimates: October was the worst month on record for attacks on commercial vessels in the Strait of Hormuz and nearby waterways, according to maritime security incident tracking data cited in the report. These conditions keep the possibility of continued lower shipments in the market’s calculations during the winter season.

Weather stands out as a factor that could shift the balance of European gas even if supplies do not change by as much. Goldman said a deviation in temperatures in northwestern Europe from the average could alter regional demand by an amount equivalent to 12% of storage capacity. This gap comes as EU facilities enter the 2026-2027 heating season with their lowest inventories since 2013, according to the International Energy Agency. Lower inventories increase Europe’s need for imported LNG and leave less room to cope with cold spells or delayed shipments. The bank therefore combined weather and supply risks in the scenario it said the market prices at a 47% probability.

International Energy Agency data show the scale of the disruption to Gulf supplies this year: the halt in LNG flows through Hormuz cut shipments from Qatar and the UAE by more than 60 billion cubic meters between March and October 2026. Higher production outside the Gulf offset part of the shortfall, as LNG output outside the region rose 14%, or more than 40 billion cubic meters year over year over the same period, covering about two-thirds of the decline in Gulf supplies. Even so, spot gas prices at Europe’s TTF hub rose about 70% year over year to an average of about $20 per million British thermal units between March and October, the agency said. Asian and European prices reached their highest levels since the 2022-2023 gas supply crisis. This backdrop indicates that supply growth outside the Gulf did not prevent prices from rising amid shipment losses and market disruption.

The agency expects global LNG supply to fall 3%, or about 20 billion cubic meters, in 2026, while global gas demand could decline by about 1.5%, or about 65 billion cubic meters. EU storage facilities were 74.9% full on Oct. 26, 2026, compared with 82.9% on the same date in 2025 and 95.3% in 2024, according to S&P Global Energy data. The TTF contract for November delivery had exceeded €100 per megawatt hour during trading on Oct. 28, reaching €100.425 at 15:03 GMT. The TTF month-ahead index assessment also rose about 31% between Oct. 1 and 27. These levels provide context for the bank’s warning about winter risks, while its new first-quarter and 2027 average forecasts remain tied to continued supply constraints and seasonal demand.

The International Energy Agency warned that low inventories could increase the need to refill them during the summer of 2027, potentially extending tightness in the global market into next year. In an agency simulation, EU inventories could fall below 10% of working capacity by the end of March 2027 if the winter is colder than average and LNG flows through Hormuz remain disrupted. Storage levels have operational significance because withdrawal rates tend to decline when inventories fall below 30% of working capacity. The agency estimated cumulative LNG supply losses of about 150 billion cubic meters between 2026 and 2030 due to current disruptions and medium-term damage to infrastructure. By contrast, four major liquefaction projects in North America have reached final investment decisions since March 2026, which could bolster supply security and gas affordability over the long term.