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.
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