Goldman Sachs has said that European natural gas prices will likely drop by more than half over the next six months since the continent successfully negotiates a winter without Russian gas.

The investment banking giant asserted that it expects benchmark prices for northwest Europe to fall sequentially to around 100 euros a megawatt-hour (MWh) in the first quarter of next year, assuming average winter temperatures.

Currently, the forward curve projects prices to be around 200 EUR/MWh, while the price for delivery in October is around 192 EUR/MWh. Forecasts are based on the view that Europe has already done the hard work in preparing itself for the peak demand season. It has filled storage faster than usual with aggressive purchases on the global market for liquefied natural gas to replace the imports that are no longer coming through Russian pipelines. Also, the acutely high prices have already led to substantial demand reduction, notably from industrial clients.

During winter, it is expected that the high storage levels at the start of the season to accommodate larger-than-average storage withdrawals. However, even at 100 EUR/MWh, prices would still be around six times what they were only a year ago, giving a considerable challenge to the competitiveness of the European industry and a significant threat to consumers’ spending power.