Goldman Sachs forecasts increase in UK gas prices

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Investment banking firm, Goldman Sachs has advised gas suppliers to buy up the UK gas to be delivered during the next quarter, according to an article published by Reuters.

Although some analysts have forecast that gas prices will fall below the current 56p a therm price for the third quarter, Goldman Sachs has said it expects prices to rise by around 20 per cent.

The Government is currently pressing the Big Six energy companies to do more to cut gas and electricity prices for consumers. Energy suppliers had largely blamed escalating wholesale costs for over-inflation rises in the past 12 months.

Now, Goldman Sachs argues that the prices will increase again as suppliers look to lure LNG (liquified natural gas) supplies away from Asia - which is currently the world's most expensive gas market.

Goldman Sachs has argued that it expects third quarter prices to increase by in excess of 14p per therm, adding that suppliers of LNG based in the Atlantic Basin will attempt to divert supplies back to Europe in order to replenish depleted stockpiles.

However, some banks have contradicted Goldman Sach's claims.

Societe General gas analyst, Thierry Bros, commented in a research note: "The increase in Russian contracted volumes going forward given tepid demand in Europe is likely to weigh on gas prices until 2013, especially in the summer."

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