Goldman Slashes Its Forecasts For Natural Gas Prices

Fracking, Cabot Oil

Goldman Sachs is lowering its forecast for natural gas prices on an unexpected surge in production.

The revision sees Q3 prices at $3.85/mmBtu and Q4 at $4.25/mmBtu, from a previous estimate of $4.50/mmBtu for both.

Analysts Damien Courvalin, Jeffrey Currie, and Samantha Dart write in a note this morning that two consecutive EIA storage reports reflect “stronger than expected production growth, in part because of debottlenecking in the Marcellus shale.”

Prices have dropped about $0.50 — 12% — since May. Futures were around $3.66 Monday.

They also note coal-to-gas switching has slowed, though they argue this is bullish long-term and reflects a structural tightening shift in the demand curve.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.