(Bloomberg) -- European natural gas slipped to a six-week low, as Goldman Sachs Group Inc. trimmed its price outlook and said the market is better supplied than expected heading into winter.
Benchmark futures dropped as much as 5.8%, before paring the loss a bit by the market close. Price declines could accelerate later in the heating season if winter proves milder than forecast, Goldman analysts led by Samantha Dart said in a note.
While the global market remains tight — meaning Europe is still vulnerable to potential disruptions — capped gas usage and higher renewable generation have helped keep prices in check this year, according to the bank.
The region’s underground gas storage sites are still about 99% full, data from Gas Infrastructure Europe show, and there were some marginal replenishments on Sunday given normally low weekend demand.
Europe’s inventories of liquefied natural gas are also high, and more super-shilled fuel is coming to the market. Floating cargoes on the water for at least 20 days are falling across the globe after a record jump, according to BloombergNEF, meaning some sellers are unloading LNG.
Still, winter risks “remain skewed to the upside,” Goldman analysts also warned. Factors such as supply interruptions, weather shocks or reduced gas-saving efforts from consumers could still cause prices to as much as double if the market tightens.
Dutch front-month gas, Europe’s benchmark, settled 3.8% lower at €44.07 a megawatt-hour in Amsterdam, the lowest since Oct. 9. The UK equivalent contract also declined 3.8%.
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