Goldman Sachs analysts told clients in a note this week that the company sees narrow price growth for Henry Hub through 2025. The company expects production to rebound in June, but stabilize at a lower level than previously expected. This prompted Goldman to revise its BalSum24 Henry Hub forecast upwards to $2.65/mmBtu (from $2.15/mmBtu) and upwards to $2.88/mmBtu.
The revised forecast was issued despite a continued decline in production, which has remained below 99 Bcf/d over the past few weeks. Goldman revised its production forecast by 0.5 Bcf/d to 100.6 Bcf/d for the rest of the summer.
Despite the revised gas price forecast, Goldman believes price increases are narrow. “In our view, a sustained price increase would lead to (1) reduced gas burning as a result of the coal-to-gas switch and (2) alleviated production outages, preventing physical market tightening and keeping storage on an elevated path, which could again increase the risk of congestion,” they wrote analysts in the note.
Prices are only expected to raise significantly once winter begins as a result of rising demand for feed gas from modern LNG projects. “This view is supported by the additional demand support we are currently seeing as a result of changes to our gas combustion model to accommodate higher power loads from data center expansion and electrification,” the analysts said.
As such, Goldman remains bullish Sum25 Henry Hub at $4/mmBtu compared to forwards at $3.37/mmBtu. They recommend taking a long position on June 25 Henry Hub.
