US bank Goldman Sachs expects gas prices to rise again to August levels. There is panic because Russia is currently no longer supplying gas through the Nord Stream 1 gas pipeline.
There is again a lot of uncertainty about Russian gas supplies to Europe. The country carried out maintenance work on Nord Stream 1 last week. Those works have now ended and gas should flow through that pipeline again, but Russian operator Gazprom said on Friday that Nord Stream 1 will remain closed for a while. According to the state-owned company, technical defects have been found in the compressor station in Portovaya, Russia. They would be the result of leaking oil.
“The news is likely to rekindle market uncertainty about the European Union’s ability to manage gas storage during the winter,” Damien Courvalin, Goldman Sachs’ chief of energy research, warns in an analysis. “That will lead to a significant rally in the gas market, possibly matching the peak of August.”
The bad news comes just as gas prices were cooling. For example, the European gas price (TTF Futures Netherlands for October) currently fluctuates around 210 euros per megawatt hour. For comparison: on 26, that price had risen to 346 euros. This weakening in prices came after reports that the European member states are succeeding better than expected in replenishing gas stocks.
The German energy regulator said on Saturday that gas supplies are 84.5 percent full. The Netherlands said on Friday that it will meet the European Union’s target of filling gas reserves by 80 percent this week.
“Prices will stabilize after short-term shock”
Goldman Sachs expects prices to eventually stabilize at levels slightly above current prices, despite the short-term shock. There is, however, one condition: the high prices must temper the demand for gas.
“Even if Russia does not supply gas to Europe via Nord Stream 1, we expect the European gas price to fluctuate around EUR 215-230 per megawatt hour, depending on the extent to which limited gas supplies are offset by lower German re-exports of Russian gas,” sound it.