Morgan Stanley Cuts 2023, 2024 EU Gas Price Forecasts

Morgan Stanley cut its price outlook for European natural gas for the remainder of this year and next year as the continent’s demand for the fuel remains tepid.

• TTF prices are now expected to average €35/MWh in the second quarter, down from last month’s forecasts of €55/MWh, Morgan Stanley analysts said.
• Prices are forecast to average €38/MWh in 3Q, €46/MWh in 4Q and €48/MWh in 2024.
• Gas prices have already slumped more than 85% from last year’s peak as a relatively mild winter, robust reserves and LNG imports helped mitigate the impact of reduced Russian supplies. Prices have further room to ease as supplies remain plentiful, storage sites are well stocked, and demand is relatively low, the bank said.
• “Despite lower prices, LNG imports remain very strong and show little sign of slowdown,” the analysts said.
• Cheaper costs also failed to spur more gas use, with consumption in Europe’s industrial sector about 23% lower than normal last month.
• Morgan Stanley reduced its estimates for end-winter storage levels in key European Union economies to 57% full, down from 59% as this week’s cold spell is forecast to increase withdrawals. But it’s still high enough to make the summer restocking season less challenging than many had feared.
• Even though the European gas market “will likely be structurally more volatile in the future,” the near-term outlook is bearish, Morgan Stanley said. There’s even a risk of “over-stocking” this summer.