Goldman Sachs Maintains Henry Hub Sum24 Forecast but 2025 Reduced

Goldman Sachs maintains a Henry Hub forecast of $2.1/mmbtu for summer 2024 with prices below current forward levels needed to manage storage.

• “Our forecast embeds the expectation that prices will need to remain low to incentivize close to maximum coal-to-gas switching and disincentivize producers from bringing additional volumes to market.”
• Recent announcements suggest that production declines will be bigger than expected resulting in a drop in production assumptions to 102.1bcf/d this summer.
• The Henry Hub forecast for 2025 has been reduced from $4.40/mmbtu to $3.80/mmbtu with prices closer to marginal costs sufficient for sustained production growth.
• The global LNG buildout adds downside risk to US gas in the second half of the decade.
• The “large risk” of an oversupply in global gas could be big enough to require cuts in US LNG exports during bearish periods, resulting in domestic oversupplies and requiring a drop in prices.