Gas Prices to Drop, Says Goldman

Gas prices at the UK’s National Balancing Point will drop this year to 59.7 pence a therm because of lower demand and discounts from pipeline gas suppliers, Goldman Sachs Group has said.

The forecast is 14.1 pence, or 195 lower than Goldman’s previous projection, Samantha Dart, a London-based analysts for the firm, said in a report quoted by newsagency Bloomberg. U.K. NBP prices will rebound starting in 2014 to 66 pence as a stronger economy stokes demand for gas and production declines in northwest Europe, the analysts said.

“We had been expecting that substantial diversion of liquefied natural gas away from Europe would be enough to tighten European natural gas markets so that spot prices would need to rise to attract spot cargoes back,” Goldman Sachs said.

Goldman Sachs cut its forecast for northwest Europe’s gas demand this year to 302 billion cubic meters from its original projection of 321 billion cubic meters. The region’s gas needs may rise to 304 billion cubic meters in 2014, the report said.