Gas prices have been predicted to nearly treble this winter across Europe.
Goldman Sachs has forecast that prices could rise beyond €100 per megawatt hour in the second half of 2023 - a threefold increase from the present rate of €36.
It comes as prices have fallen in both Asia and Europe, the Telegraph reported, after demand has been lower following a mild winter, strong inflows of natural gas, and stockpiling. Households have also been incentivised to use less gas.
Dutch front-month futures fell by 0.9 per cent on Tuesday, representing a decline for Europe as a whole.
Samantha Dart, head of natural gas research at Goldman Sachs, said in a note on Tuesday: “The combination of winter weather risk and potentially declining conservation efforts by households can quickly tighten balances, enough to trigger a sharp rise in winter prices above €100.”
The bank had previously, correctly, predicted the price of gas would fall through winter 2022-23 but despite Europe’s gas stocks being more than half full it seems circumstances could pile on the pressure.
Also on Tuesday, oil giant Saudi Aramco reported a first-quarter profit of 31.88 billion US dollars (£25.2 billion), down from 39.47 billion dollars (£31.2 billion) in the same quarter last year.
"Even if industrial demand remains sluggish this summer, this is not a guarantee that storage will be comfortable throughout winter,” a Goldman Sachs statement added.
“[There is] only so much capacity to store gas ahead of the heating season.”
Russia, as a major supplier of gas to Europe, has been blacklisted in many parts of the continent in retaliation for invading Ukraine.
UK energy imports from Russia decreased throughout 2022 and dropped to zero by December, the department for energy said.
The department released a statement in March which said that in 2022 UK gas demand decreased by 7.5 per cent compared with 2021.
The Energy and Climate Intelligence Unit said the invasion “drove unprecedented turmoil in international gas markets” with “supply restrictions, sanctions and sabotage” contributing to high prices and fluctuations.
The war for Ukraine has dragged on since February 2022 and shows no signs of easing with Russian president Vladimir Putin saying on Tuesday that his soldiers stand at a “turning point,” with the whole country behind them.
Mr Putin added: “The goal of our enemies, and there is nothing new here, is to achieve the disintegration and destruction of our country.”
“European demand for liquefied natural gas surged as countries looked to move away from Russian gas,” the British department for energy said in a March 2023 statement.
“UK liquefied natural gas imports hit a record high of 25.6bcm in 2022, up 74 per cent on the previous year.
“The USA replaced Qatar as the largest import source to the UK, supplying half of the UK’s LNG imports.”
The prices are likely to go up, according to Goldman Sachs, later in the year and this could follow several further months of cheaper bills.
Cornwall Insight predicted on Tuesday that the price cap on energy bills will fall by more than £1,200 for the average household when it is next updated.
However, because the government bill support, which has artificially lowered bills, will fall away, households will only be around £437 better off per year on average.
"As the wholesale energy market has levelled out in recent weeks, our predictions for the price cap have followed suit," Dr Craig Lowrey, a principal consultant at Cornwall Insight said.
"Some energy suppliers will potentially look to leverage this opportunity to bring back fixed tariffs on or around the price cap, with stable projections lowering concerns they will lose out over the fixed term.”
