Analysts at Goldman Sachs said in a note to clients this week that the company sees limited upside for Henry Hub prices through 2025. The company expects production to recover in June, but settle at lower levels than previously expected. This has led Goldman to revise its BalSum24 Henry Hub forecast upwards to $2.65/mmBtu (from $2.15/mmBtu) and then to $2.88 mmBtu.
The revised forecast comes even as production has continued to decline, remaining below 99 Bcf/d in recent weeks. Goldman revised its production forecast for the remainder of the summer by 0.5 Bcf/d to 100.6 Bcf/d.
Despite the revised forecast for gas prices, Goldman believes upside potential is limited. “In our view, a sustained price increase would lead to (1) a decrease in gas consumption due to the switch from coal to gas and (2) an end to the production shutdown, thus preventing physical tightening in the market and increasing storage level remains. an elevated path, which could again increase congestion risks,” the analysts wrote in the note.
Prices are only expected to rise meaningfully once winter sets in due to increasing demand for feed gas from new LNG projects. “This view is reinforced by the additional demand support we are now seeing as a result of changes to our gas combustion model to account for higher power loads from data center growth and electrification,” the analysts said.
Accordingly, Goldman remains bullish Sum25 Henry Hub at $4/mmBtu versus forwards at $3.37/mmBtu. They recommend going long on June 25 at Henry Hub.
