Goldman: Potential NS1 Drop Brings Upside Risk To TTF Forecast

Goldman Sachs note that “news today that Gazprom intends to cut Nord Stream 1 (NS1) flows to around 20% of capacity this Wednesday from 40% currently, a 30 mcm/d impact, has sent European gas prices rallying, with TTF up EUR14 on the day, at EUR176/MWh ($53/mmBtu). While we expect NS1 flows to be restored back to a 40% run rate once the repaired turbine is in place, we believe Russian supply uncertainty remains high. In terms of price risks, under our base case of a 40% NS1 flow rate we would expect prices around EUR170/MWh throughout Q322 to help take storage to 90% full by end-Oct. Instead, a zero flow would likely lift TTF above EUR210/MWh in our view, to increase price-driven demand destruction to help compensate for such large supply losses. The 20% NS1 run-rate scenario, discussed in media reports today, would be in between the two scenarios described above, suggesting potential near-term upside to prices to around EUR190/MWh.”