Goldman Sachs Says Natural Gas Prices Have Spiked Too High

Goldman Sachs has weighed in on the recent surge in natural gas prices, arguing that current levels represent an overheating of the market driven by a deep freeze sweeping across the United States. The investment bank believes the spike is temporary and that prices will eventually correct downward as conditions normalize.

Natural gas prices have climbed sharply in recent weeks, jumping around 10 percent in recent trading sessions and reaching $5.37 per million British thermal units. The surge has sent ripples through energy markets and captured the attention of major financial institutions monitoring the sector.

Background

The natural gas market has been volatile throughout 2025 and into early 2026. Prices started the year in the low-$3 range, climbed through the spring and autumn months, and hit a December high near $5.18 before pulling back slightly. This wide trading range reflects the sensitivity of natural gas markets to shifts in weather patterns, supply levels, and demand expectations.

The current cold snap gripping the United States has intensified heating demand across the country, pushing prices higher as consumers and businesses turn up their thermostats. This is a normal seasonal pattern, but the severity and timing of the freeze have caught some market participants' attention.

Key Details

Goldman Sachs maintains a summer 2026 forecast of $4.50 per million British thermal units for natural gas prices on the NYMEX exchange. This projection sits notably below current price levels, suggesting the investment bank expects meaningful price correction over the coming months.

The bank also recently raised its forecast for European natural gas prices. Goldman now sees the TTF benchmark, which tracks European gas prices, averaging 37 euros per megawatt-hour for 2026, up from its December projection of 29 euros per megawatt-hour. This adjustment reflects expectations of stronger demand in Europe.

"Goldman Sachs maintains its $4.50 per million British thermal units summer 2026 forecast, suggesting it expects natural gas prices to decline from current elevated levels as the deep freeze passes." – Goldman Sachs

Other forecasters have offered different outlooks. The U.S. Energy Information Administration projects Henry Hub spot prices will average around $4.01 per million British thermal units for 2026. Bernstein, another research firm, maintains a longer-term assumption of about $5 per thousand cubic feet for 2026, suggesting it sees higher structural support for prices than Goldman's summer forecast implies.

Supply and Storage Dynamics

Dry gas production is expected to reach approximately 109.1 billion cubic feet per day in 2026, according to energy officials. Current storage levels sit above the five-year average, which should help moderate prices once the winter season ends and heating demand drops. Ample supply combined with expectations for lower retail gas rates in 2026 could limit how much wholesale price increases get passed through to consumers.

However, Goldman Sachs has noted that a significantly colder-than-average December in the United States has kept storage levels at relatively low levels heading into late October 2026. This dynamic leaves the 2026-27 winter vulnerable to potential price shocks if weather patterns shift again.

What This Means

The disagreement between Goldman Sachs and some other forecasters highlights the uncertainty surrounding natural gas prices heading into 2026. Goldman's view that current prices represent an overshoot suggests the market may be overreacting to the immediate cold weather without accounting for the longer-term supply picture.

For consumers, the implications depend on how quickly prices fall. If Goldman is correct and prices retreat toward $4.50 or lower, households and businesses could see relief on their energy bills in the coming months. If other forecasters prove more accurate and prices hold in the $4 to $5 range, energy costs will remain elevated through the year.

For the energy industry and investors, the current volatility shows how weather-dependent natural gas markets remain. A single cold snap can trigger sharp price movements, but these moves often prove temporary once conditions normalize. The key question is whether structural factors like increased demand for power generation and industrial use will support higher average prices throughout 2026, or whether supply abundance will keep prices moderate.

Goldman's European forecast adjustment also signals that global energy dynamics are shifting. Higher European prices could attract more U.S. liquefied natural gas exports, which could support American prices even if domestic supply remains ample.