Goldman Sachs says warm winter weather a risk to gas price view – Natural Gas World

Written by Amanda

Goldman Sachs says warm winter weather a risk to gas price view

Jan 9 (Reuters) – An unseasonably warm winter in Europe and the United States poses a downside risk to Goldman Sachs’ natural gas price targets for 2023, the bank said in recent note.

U.S. natural gas futures eased last week in their worst start to a year on record, according to Refinitiv data going back to 1991, on the back of forecasts for warmer-than-normal weather and lower than usual heating demand to continue into late January.

However, potential support from a faster reopening of China after COVID-19 lockdowns, a stronger overall European economic outlook due to relaxed energy restrictions and a less threatening inflationary backdrop meant Goldman maintained their 2023 bullish outlook on oil and other commodities.

Oil prices jumped about 2% on Monday after China’s move to reopen its borders boosted the outlook for fuel demand and overshadowed global recession concerns.

In a note dated Jan. 8, Goldman said the immediate spot demand hit to oil from lost gas-to-oil substitution in Europe due to falling gas prices could be as much 1.5 million barrels per day.

“Should European gas prices remain weak for the rest of this year, the extended loss of gas-to-oil substitution would lower our oil price forecast by $4 per barrel(/bbl) for 2023,” the bank said, but noted that a faster reopening of China is “alone worth +$5/bbl on the 2023 oil price forecast.”

Scientists have not yet analyzed the specific ways in which climate change has affected the recent high temperatures, but January’s warm weather spell fits into the longer-term trend of rising temperatures due to human-caused climate change. (Reporting by Bharat Govind Gautam in Bengaluru; Editing by Josie Kao)

Source: news.google.com

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