24 March 2020 | 2:56AM EDT

Natural Gas

US gas likely the first commodity market to rebalance

n The combination of lower US gas production with a global recession this Samantha Dart
+1(212)357-9428 |
summer has set the stage for a ‘whiplash’ in US natural gas markets. samantha.dart@gs.com
Goldman Sachs & Co. LLC
Specifically, we expect that the cut in associated gas production, although
Damien Courvalin
significant, will show in US gas markets late enough this year that end-summer +1(212)902-3307 |
damien.courvalin@gs.com
2020 storage will likely face record-high levels, keeping summer prices under Goldman Sachs & Co. LLC

pressure. However, as we enter the 2020/21 winter, we expect production Huan Wei
+1(212)357-2353 | huan.wei@gs.com
declines to be visible enough that gas prices will rally sharply in our view to help Goldman Sachs & Co. LLC
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summer 2021 reach comfortable inventory levels.

n Although we expect demand to fall sharply in 2Q20, larger-than-initially-expected
production declines suggest US gas balances will not likely require Appalachian
production shut-ins in summer to balance the market. As a result, we raise our
2Q20 NYMEX natural gas price forecast marginally to $1.60/mmBtu from
$1.50/mmBtu, which still reflects our view of a strong need for C2G substitution.
n This price revision does not imply that production shut-ins won’t occur this
summer. Potential bottlenecks as large volumes of unwanted gas look for a
home may lead to localized gas production shut-in events away from the Hub.
Further, the growing surplus in oil markets suggests we might also see oil
shut-ins in the coming weeks, adding to potential near-term disruptions to gas
production. The more shut-ins we see in 2Q20, the higher the upside risk to our

4d9a886718a24b1eb7cb57f43edc3a99
$1.75/mmBtu 3Q20 gas price forecast, as gas balances would require lower C2G
substitution to manage inventories. This highlights the risk of shorting US
summer natural gas prices from current levels despite the magnitude of the
expected impact to economic activity in the coming months.
n As we move into 2021, this path of declining oil and gas production, if sustained,
will likely result in an exceptionally tight summer 2021, which suggests current
forward prices are not sustainable. Specifically, given our production outlook, we
now believe even our bullish $3.00 and $2.75 gas prices forecasts for next
winter and the 2021 summer would likely fall short of incentivizing enough
changes to supply and demand to guarantee enough storage next year.
Accordingly, we raise our 2020/21 winter and 2021 summer forecasts to
$3.50/mmBtu and $3.25/mmBtu.

Investors should consider this report as only a single factor in making their investment decision. For Reg AC
certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html.
 Goldman Sachs Natural Gas

US gas likely the first commodity market to rebalance

The combination of lower US gas production, which we expect to last through at least
mid-2021, with a global recession this summer has set the stage for a ‘whiplash’ in US
natural gas markets. Specifically, we expect that the cut in associated gas production,
although very significant, will show in US gas markets late enough this year that
end-summer 2020 storage will likely face record-high levels near its 4.3 Tcf capacity,
keeping summer prices under pressure. However, as we enter the 2020/21 winter, we
expect production declines to be visible enough that gas prices will rally sharply in our
view to help summer 2021 reach comfortable inventory levels.

We expect 2Q20 to be the softest part of summer balances, as this is when we

anticipate the economic slowdown impact to gas demand to hit the hardest, while most
of associated gas production declines are likely to intensify only from late 3Q20. That
said, the larger-than-initially-expected production declines we forecast, including a 1.5
Bcf/d downward revision to our summer 2020 natural gas production numbers, mean
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that US gas balances will not likely require Appalachian gas production to shut in during
the upcoming injection season to help balance the market. As a result, we raise our
2Q20 NYMEX natural gas price forecast marginally to $1.60/mmBtu from $1.50/mmBtu,
which still reflects our view of a strong need for C2G substitution to help balance the
market. And following from our US gas price revision, we raise our 2Q20 TTF and JKM
forecasts marginally to $2.25/mmBtu and $2.50/mmBtu from $2.10/mmBtu and
$2.40/mmBtu previously, implying a shut US LNG export arb at $1.60/mmBtu US gas
prices.

Importantly, our higher 2Q20 US gas price forecast does not mean that US gas
production shut-ins won’t occur this summer. With 2Q20 expected demand declines
stronger than supply cuts as discussed above, storage injections will likely soar, with
May flows in particular expected to hit record-high levels (Exhibit 1), as heating degree

4d9a886718a24b1eb7cb57f43edc3a99
days (HDDs) drop sharply. This can potentially create bottlenecks as large volumes of
unwanted gas look for a home, which might weigh on cash gas prices and ultimately
lead to localized gas production shut-in events away from Henry Hub. The risk of such
bottlenecks is especially significant in the Gulf and the Midwest, where industrial
demand for gas is the highest (Exhibit 2). Further, with WTI prices already near US oil
production cash costs and the surplus in US oil balances continuing to grow into 2Q20
we might also see oil shut-in events that may add to gas production shut-ins, which
instead would bring relief to summer gas balances.

The more gas and oil production shut-in events we see in 2Q20, the more upside risk to
our $1.75/mmBtu 3Q20 gas price forecast, which we keep unchanged for now, as US
gas balances would require lower C2G substitution to manage inventory levels. This
highlights the risk of shorting US summer natural gas prices from current levels despite
the magnitude of the expected impact to economic activity in the coming months.
Ultimately, we believe that the anticipation of the significant deficit mounting for 2021
will lead summer 2020 US gas prices to decline just enough to keep end-Oct20 storage
levels manageable.

24 March 2020 2
 Goldman Sachs Natural Gas

Exhibit 1: We expect record-high May injections Exhibit 2: US industrial demand for gas is particularly high in the
May storage injections, Bcf Gulf and Midwest
Share of industrial demand by region
600
GS
forecast
500

400 Texas, 22%

Midcon, 24%

300
Southwest, Northeast,
10% 13%
200

Southeast, Pacific-
100 27% Northwest, 2%

0 Rockies, 3%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: EIA, Goldman Sachs Global Investment Research Source: Platts, Goldman Sachs Global Investment Research
For the exclusive use of TAMMY@INTERSECTPOWER.COM

A sharp, albeit brief, shock to US natural gas demand

We revise our summer 2020 natural gas demand lower by approximately 2.5 Bcf/d, with
2Q20 in particular down 3.8 Bcf/d. This reflects our economists’ most recent downgrade
of US GDP growth to -3.8% this year with the trough of economic activity in 2Q,
followed by a gradual rebound in 2H20. Further, our lower demand numbers include a
marginal downward revision to our expected exports to Mexico largely driven by
renewed delays to the start of the 1.5 Bcf/d Wahalajara system to late 2Q20 from
March.

Industrial demand - Although the current containment measures to slow the spread of
Covid-19 in the US impact services and transportation more visibly than manufacturing,
the depth of the slowdown in economic activity and the risk that more manufacturing
sites shut down suggest the impact on industrial demand for natural gas will likely be
larger than during the financial crisis, though not lasting nearly as long. Our current base

4d9a886718a24b1eb7cb57f43edc3a99
case assumes the impact to demand will peak at 2.5 Bcf/d - 11% of the 2019
weather-adjusted levels - in Apr-May, with a gradual recovery through September and
returning to previously expected levels by October 2020 (Exhibit 3). This is not too far
from the impact we are currently seeing in Italy, which is currently under a full
lockdown, where this week’s industrial demand for gas is at its lowest level since the
new year holidays and is approximately 15% below the 5-year average (Exhibit 4).

Power burns - We also expect an impact to gas demand for power larger than what we
observed during the financial crisis given the degree of slowdown expected in economic
activity in the US as discussed above. At the moment we assume peak impact at nearly
2 Bcf/d in Apr-May - approximately 7% of weather-adjusted 2019 levels - with a slightly
faster recovery relative to industrial demand (as observed in 2008/2009) and a
resumption of normal burn levels by August (Exhibit 5). Although this is well below the
17% demand impact observed currently in Italy (Exhibit 6), it’s worth noting that
coal-fired generation in Italy is proportionally smaller than in the US - and its gas share,
larger - leaving Italian gas burns more vulnerable to being cut as demand drops off.
Further, the US Nuclear Regulatory Commission (NRC) has warned that it will require

24 March 2020 3
 Goldman Sachs Natural Gas

plants to shut if they cannot be appropriately staffed during the Covid-19 crisis, posing
an upside risk to thermal generation relative to our current assumptions.

Exhibit 3: We expect impact to industrial demand to peak at 2.5 Exhibit 4: Italian industrial demand for gas is 15% below average
Bcf/d in Apr/May GWh/d
Industrial demand for gas and forecast, Bcf/d

27 2020 2019 2017 2018 2020 previous 600

25 500

23 400

2020
300
21 5yr highs
5yr average
200
19 5yr lows

100
17

0
15
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Source: Platts, Goldman Sachs Global Investment Research, Haver Source: Bloomberg

Exhibit 5: We expect impact to power burns to peak at nearly 2 Exhibit 6: Italian power burns are down 17% from average
Bcf/d in Apr-May Gas for power, GWh/d
US power burns and forecast, Bcf/d

45 1200
2020 2019 2017 2018 2020 prevous

40 1000

35 800
2020
30 600 5yr highs
5yr average
25 400 5yr lows

200
20

4d9a886718a24b1eb7cb57f43edc3a99
15 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Platts, VelocitySuite, Haver, Morningstar, Bloomberg, Goldman Sachs Global Investment Source: Bloomberg
Research

US LNG exports - As we discussed recently we currently base case that shutting the
US LNG export arb will be part of the solution to help rebalance global gas markets. We
maintain this view, especially as the economic impact of Covid-19 intensifies also in
Europe and reduces demand for natural gas at the same time that several maintenance
events at platforms or processing plants are now being postponed or cancelled by
Equinor, which keeps more gas flowing into NW Europe. The US LNG export arb to
Europe has continued to narrow, with Jun-Sep contracts moving in and out of the
money for US LNG exports as gas and currency markets remain volatile. As of Friday,
March 20th, the US LNG export arb to Europe averaged only $0.01/mmBtu for the
summer, open by $0.15/mmBtu for April deliveries, but shut by $0.06/mmBtu on
average in Jun-Sep. The arb to Asia has also narrowed, to $0.25/mmBtu for the season,
though it remains wide in the front of the curve, at $0.73/mmBtu for May deliveries
(Exhibit 7).

24 March 2020 4
 Goldman Sachs Natural Gas

It is important to emphasize that this process has never been tested, which means that
TTF and JKM may have to move significantly below the estimated variable cost of US
LNG exports before we see cargo cancellations in size. Once such cancellations start to
take place, we maintain our view that they are more likely to come from trading houses
and portfolio players, and particularly from tolling facilities such as Freeport LNG and
Elba as we have discussed previously. Hence, we currently assume US LNG exports will
be 0.7 Bcf/d and 1.0 Bcf/d lower in 2Q20 and 3Q20, respectively, owing to expected US
LNG cargo cancellations. We note, however, that these downward revisions to our US
LNG export assumptions are partly offset by an increase to our forecast feedgas flow
into Sabine Pass and Corpus Christi trains, which have been operating sustainably above
our previously-assumed operational capacity (Exhibit 8). Further, we have also revised
feedgas flows into Freeport T2 and Cameron T2 higher as the trains came online and
ramped up significantly faster than what had been suggested by the very slow ramp-up
processes observed for Freeport T1 and Cameron T1. Net, our US LNG export
assumptions for this summer are revised lower by 300 mmcf/d vs previously.
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Exhibit 7: The US LNG export arb to Europe was shut as of Mar 20th Exhibit 8: Sabine Pass has been operating at higher levels since
for Jun-Sep maintenance last summer
$/mmbtu Sabine Pass feedgas flow, mmcf/d

Variable costs - US to EU Variable cost - US to Asia 4,300

8.00
TTF JKM
4,100
7.00
3,900
6.00 3,700

5.00 3,500

3,300
4.00
3,100
3.00 Fog and
2,900
maintenance
2.00 2,700 Maintenance

1.00 2,500

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Source: NYMEX, Platts, ICE, Goldman Sachs Global Investment Research Source: Bloomberg

Associated gas cuts too little too late to rebalance 2020...

The collapse in oil prices driven by expectations of an unprecedented surplus in the
market has led US oil producers to announce sharp cuts in capex, though these have yet
to be reflected in the oil rig count as Damien Courvalin pointed out in a recent note. This
implies that the bulk of the declines in oil and associated gas production will likely not
take place until later this year and into 2021. Specifically, we believe that the ~700 kbd
sequential decline we expect in US oil production between 1Q20 and 4Q20 will
translate into approximately 1.8 Bcf/d of sequential declines in natural gas production, of
which we expect only 0.9 Bcf/d to be visible in 2Q-3Q20. This implies a net revision to
our summer 2020 natural gas production expectations of -1.5 Bcf/d vs. previous to 92.5
Bcf/d, including large revisions to our Permian growth numbers, which are exacerbated
by lower export to Mexico assumptions. With the expected impact to supply 1 Bcf/d
smaller than our downward revisions to demand this summer, we believe end-October
storage levels will face new highs and may approach capacity levels. Given the ongoing
collapse in oil demand, however, there are rising risks that widespread oil production

24 March 2020 5
 Goldman Sachs Natural Gas

shut-ins need to occur in coming months.

Owing to the fluid nature of ongoing changes in supply and demand, we think it is
useful to consider different scenarios for the summer, especially given the risk of oil and
gas shut-in events in 2Q20 discussed above. However, under current forward prices,
even flexing production and demand impacts for this summer by 0.5-1 Bcf/d, few are
the scenarios where end-October storage would finish below 4 Tcf (Exhibit 9). Another
way to look at it is that, under our base-case supply and demand assumptions, it would
take a 10+ Bcf/d gas shut-in event lasting for a full month to bring end-Oct20 storage
levels below 4 Tcf.

Exhibit 9: Most scenarios lead to end-October 2020 storage finishing above 4 Tcf
End-Oct20 scenarios under current forward prices, Bcf
Base-case 2.5 Higher Higher
Lower demand Lower demand
Bcf/d demand demand by 0.5 demand by
by 1 Bcf/d by 0.5 Bcf/d
impact Bcf/d 1 Bcf/d
Production higher by 1 Bcf/d 4752 4645 4538 4431 4324
Production higher by 0.5 Bcf/d 4645 4538 4431 4324 4217
Production down 1.5 Bcf/d vs
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4538 4431 4324 4217 4110

previous expectations
Production lower by 0.5 Bcf/d 4431 4324 4217 4110 4003
Production lower by 1 Bcf/d 4324 4217 4110 4003 3896

Source: EIA, Platts, Genscape, NYMEX, Morningstar

...but are more than enough to drive US nat gas prices sharply higher in 2021
While summer 2020 storage will likely reach record-high levels should the economic
impact our economists currently expect play out, storage carried over into 2021 will not
be enough in our view for a comfortable end-Oct21. To be clear, our end-Mar21 storage
expectation under current forward prices near 1.4 Tcf would still be well above the 837
Bcf observed following the 2013/14 polar vortex event, hence not implying a stock-out.
However, by then we expect the impact of lower oil production on associated gas
volumes to be much more visible. Specifically, we revise our expected Cal21 US natural
gas production 5.1 Bcf/d lower to 90.5 Bcf/d, consistent with our Equity Research

4d9a886718a24b1eb7cb57f43edc3a99
colleague’s expectations of a 1.3 mb/d sequential loss in US oil production from 2Q20 to
3Q21 (Exhibits 10 and 11).

24 March 2020 6
 Goldman Sachs Natural Gas

Exhibit 10: We revise our expected Cal21 US natural gas production

5.1 Bcf/d lower to 90.5 Bcf/d
US gas production forecast, Bcf/d

98.0

96.0

94.0

92.0
Previous
New
90.0

88.0

86.0
Jan-20

Jun-20
Jul-20

Jun-21
Jan-21

Jul-21
Nov-20
Dec-20

Apr-21

Nov-21
Dec-21
Feb-20
Mar-20
Apr-20

Aug-20
Sep-20

Feb-21
Mar-21

May-21
May-20

Oct-20

Aug-21
Sep-21
Oct-21
Source: Goldman Sachs Global Investment Research, Genscape
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Exhibit 11: Quarterly production path by basin

Bcf/d, assumes current forward gas prices

Haynesvill Appalachi SCOOP/STAC

e a Permian Bakken Niobrara K GoM Other Total
4Q19 7.9 32.7 11.3 2.1 2.9 7.7 2.6 27.2 94.3
1Q20 7.8 31.8 11.6 2.2 2.9 7.5 2.6 27.0 93.2
2Q20 7.8 31.6 11.6 2.4 3.0 7.3 2.5 26.8 93.0
3Q20 7.8 31.3 11.6 2.3 3.0 7.1 2.5 26.7 92.3
4Q20 7.8 31.8 11.2 2.1 2.8 6.8 2.5 26.3 91.4
1Q21 7.8 31.9 10.9 2.0 2.6 6.7 2.5 26.2 90.5
2Q21 7.8 31.5 10.8 2.0 2.6 6.7 2.4 26.1 89.9
3Q21 7.8 31.6 10.9 2.0 2.5 6.7 2.4 26.2 90.2
4Q21 7.8 31.9 11.2 2.2 2.6 6.7 2.4 26.4 91.2

Source: Genscape, Goldman Sachs Global Investment Research

In the absence of a significant change in US oil producer behavior from the path they are
currently on, the much lower associated gas production next winter will be

4d9a886718a24b1eb7cb57f43edc3a99
accompanied by expectations of more of the same for summer 2021, meaning that US
natural gas production will likely continue to decline sequentially through next year’s
injection season. Under current forward prices, we believe this would lead US natural
gas balances to a record-low level that summer, nearing only 2.2 Tcf. This would be the
result of an estimated 2.4 Bcf/d summer-on-summer decline in production matched up
against a 5 Bcf/d expected increase in demand (+1.7 Bcf/d industrial, +0.5 Bcf/d power
burns, +2.2 Bcf/d LNG exports, +0.6 Bcf/d Mexican exports).

This exceptionally tight outlook suggests current forward prices are not sustainable. US
gas price moves since the collapse in oil prices nearly two weeks ago have gone in the
right direction, meaning lower this summer and higher from next winter (Exhibit 12). But
they have not moved nearly enough, in our view. Specifically, given our revised
production outlook, we now believe even our bullish $3/mmBtu and $2.75/mmBtu gas
prices forecasts for next winter and the 2021 summer, if realized, would likely fall short
of incentivizing enough changes to supply and demand to guarantee enough storage
injections next year (Exhibit 13). Accordingly, we raise our 2020/21 winter and 2021
summer forecasts to $3.50/mmBtu and $3.25/mmBtu, which we believe would drive

24 March 2020 7
 Goldman Sachs Natural Gas

end-Oct21 to more manageable levels near 3.6 Tcf. Our supply and demand sensitivity
assumptions are shown below.

Exhibit 12: Since the collapse in oil prices gas forwards have started
to reflect a tighter Cal21 balance
NYMEX gas forwards, $/mmbtu

2.80

2.60

2.40

2.20
Last close
2.00
6-Mar
1.80

1.60

1.40
For the exclusive use of TAMMY@INTERSECTPOWER.COM

Source: NYMEX, Goldman Sachs Global Investment Research

Exhibit 13: US gas prices likely need to move up $1/mmBtu to keep Oct21 storage at manageable levels
Expected impact to storage at different price scenarios, Bcf
Total
Canadian US LNG impact to End-
C2G Production imports exports storage Oct21
$2.50 winter 2020/21;
$2.30 summer 2021 2140
$3.00 winter 2020/21;
$2.75 summer 2021 420 141 329 890 3030
$3.50 winter 2020/21;
$3.25 summer 2021 858 282 329 1469 3609
$4.00 winter 2020/21;
$3.50 summer 2021 1168 423 329 151 2071 4211

4d9a886718a24b1eb7cb57f43edc3a99
Source: EIA, Genscape, VelocitySuite, NYMEX, Platts, Bloomberg, Haver, Morningstar, Goldman Sachs Global Investment Research

Appalachia and Haynesville production - We assume a $0.50/mmBtu change to Cal21

natural gas prices would trigger a production response in summer 2021, though not at
the 400 mmcf/d month-on-month pace observed in Appalachia in 2018 and 2019. With
gas producers increasingly focused on FCF generation and upcoming debt maturities,
they may be hesitant to increase spending. As a result, for the moment we assume
Appalachia would respond at a slower 100 mmcf/d month-on-month pace of growth and
Haynesville growing slightly more slowly than that, though even such low growth rates
would have to be tested. Net, this would add 0.7 Bcf/d on average for the 2021 summer
or 141 Bcf.

C2G - Our burn model suggests a 240 mmcf/d sensitivity for each 10c move in the
relative coal-to-gas price. Hence, for a given PRB coal price level, every $0.50/mmBtu
move in gas would approximately reduce demand by 1.2 Bcf/d or approximately 440 Bcf
cumulatively from November through October.

Canadian imports - This sensitivity is hard to gauge given the tightening that Canadian
balances may also be going through in 2021 as Montney gas production might face

24 March 2020 8
 Goldman Sachs Natural Gas

declines like the US. For the moment we assume that at higher US natural gas prices
there will be room to increase Canadian imports by 0.9 mmcf/d (or nearly 330 Bcf
cumulatively from November through October), with 0.4 Bcf/d of that compensating for
our expected Bakken declines and the remainder as increased imports through the
Northeast. It is possible we might see a response in Canadian imports even without our
forecast upside in NYMEX gas if Midwest and Northeast basis rally aggressively
enough. But even if that were to happen and even if it happened at twice the size we
are assuming, it would arguably not be a large enough impact on its own to change our
conclusions.

US LNG exports - We assume that to trigger US LNG export cancellations from next
winter, US gas prices would need to move to approximately $4/mmBtu. This is because
we expect TTF and JKM prices to rally from current levels once the physical pressure
from full storage is removed with the start of withdrawal season. As discussed, we
assume that a closed arb would trigger a 1 Bcf/d reduction in US LNG exports, adding to
151 Bcf during the winter. Further, we note that even if Cal21 TTF and JKM remain at
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their current forward levels instead of moving to our higher forecast, which would allow
US LNG cancellations to be triggered arguably at US gas prices only ~$0.50/mmBtu
higher from here, the potential impact to storage would still not be large enough on its
own to change our conclusions.

Admittedly, the level of uncertainty regarding the ongoing shock to the global economy
as well as the volatile path ahead for US oil producers remains exceptionally high.
However, as Exhibit 13 shows, the deficit we expect to see in US gas balances next
year is so significant that it will likely take a near-$1/mmBtu gas price move to
incentivize supply and demand responses large enough to properly address the
problem. Accordingly, we reiterate our trading recommendation to go long Cal21
NYMEX natural gas.

4d9a886718a24b1eb7cb57f43edc3a99
Appendix
Exhibit 14: GS natural gas price deck
$/mmbtu
Natural Gas NYMEX Henry Hub ($/mmbtu) TTF ($/mmbtu) JKM ($/mmbtu)
Forecast Forwards Forecast Forwards Forecast Forwards
2Q20 1.60 1.78 2.25 2.50 2.50 3.19
3Q20 1.75 1.98 2.40 2.61 2.70 3.10
4Q20 2.92 2.47 3.93 3.48 4.77 3.87
1Q21 3.50 2.44 4.70 3.88 5.80 4.45
2Q21 3.25 2.26 4.70 3.62 5.50 3.69
3Q21 3.25 2.30 4.70 3.61 5.50 3.81
4Q21 2.92 2.51

* Summer 20 1.69 1.93 2.34 2.63 2.61 3.17

* Winter 20/21 3.50 2.49 4.70 3.80 5.80 4.33
* Summer 21 3.25 2.30 4.70 3.64 5.50 3.78

* winter: Nov-Mar; summer: Apr-Oct

Source: ICE, NYMEX, Goldman Sachs Global Investment Research

24 March 2020 9
 Goldman Sachs Natural Gas

Exhibit 15: US Nat Gas Balance under current forward gas prices
Bcf/d; Storage, Bcf
Net Canadian LNG Balancing Total Net Mexican LNG ResComm Industrial Power Vehicle fuel Lease and Pipeline and Total
Production Storage
imports imports term supply exports exports demand demand Demand cons. plant cons. dist. use demand
Nov-18 88.2 4.0 0.1 0.2 92.5 4.7 4.3 32.8 24.4 25.4 0.1 4.9 2.6 99.3 2,991
Dec-18 88.6 4.6 0.5 1.7 95.4 4.5 4.6 39.5 24.6 24.6 0.1 4.9 2.8 105.7 2,671
Jan-19 88.0 6.1 0.5 1.4 95.9 4.9 4.4 48.7 25.7 27.1 0.1 4.9 3.1 118.9 1,960
Feb-19 88.0 4.8 0.3 2.9 96.0 4.8 4.2 45.7 25.6 27.7 0.1 4.9 3.1 116.2 1,395
Mar-19 88.6 5.0 0.1 1.7 95.4 4.8 4.8 35.9 24.1 25.7 0.1 5.0 2.7 103.2 1,155
Apr-19 89.0 4.4 0.1 1.4 95.0 4.7 4.5 19.2 22.4 24.5 0.1 5.0 2.1 82.5 1,529
May-19 89.3 4.4 0.1 0.4 94.2 4.9 5.6 12.8 21.7 26.8 0.1 5.0 2.0 79.0 2,000
Jun-19 89.3 4.6 0.1 1.5 95.5 5.2 5.5 9.1 21.1 33.1 0.1 5.0 2.0 81.3 2,428
Jul-19 89.9 5.1 0.0 2.2 97.2 5.4 6.0 8.3 20.9 41.1 0.1 5.0 2.2 89.1 2,680
Aug-19 92.0 4.5 0.0 1.8 98.3 5.4 5.2 7.9 21.6 41.6 0.1 5.1 2.3 89.2 2,962
Sep-19 92.0 4.6 0.0 2.7 99.3 5.4 6.2 8.5 21.4 36.5 0.1 5.2 2.1 85.4 3,378
Oct-19 93.5 4.2 0.1 0.6 98.4 5.5 6.6 14.5 22.0 31.0 0.1 5.3 2.2 87.2 3,726
Nov-19 95.0 4.3 0.0 -0.1 99.2 5.3 7.2 32.0 24.4 27.3 0.1 5.3 2.6 104.2 3,575
Dec-19 94.5 4.4 0.0 1.5 100.3 4.9 7.8 38.9 25.0 28.9 0.1 5.3 2.9 113.9 3,156
Jan-20 93.7 4.8 0.0 1.6 100.0 5.1 8.4 44.2 24.8 29.4 0.1 5.3 3.1 120.3 2,609
Feb-20 92.9 5.4 0.0 2.2 100.5 5.0 8.5 43.1 24.8 29.6 0.1 5.2 3.1 119.5 2,084
Mar-20 93.3 4.3 0.0 1.7 99.3 5.3 8.1 30.9 23.4 28.1 0.1 5.2 2.6 104.0 1,949
Apr-20 93.0 4.5 0.0 1.2 98.8 5.3 7.6 20.4 20.0 26.3 0.1 5.2 2.1 87.1 2,298
May-20 93.1 4.5 0.0 0.3 98.0 5.5 8.4 11.9 19.1 28.8 0.1 5.2 1.9 81.0 2,824
Jun-20 92.8 4.5 0.0 1.0 98.3 5.8 8.9 9.0 20.2 35.1 0.1 5.2 2.0 86.4 3,181
Jul-20 92.4 4.8 0.0 1.1 98.3 6.0 9.1 8.3 20.0 39.8 0.1 5.2 2.2 90.6 3,420
Aug-20 92.4 4.8 0.0 1.1 98.3 6.0 8.7 7.8 21.3 39.4 0.1 5.2 2.2 90.6 3,657
Sep-20 92.2 4.8 0.0 1.1 98.1 5.7 8.5 8.5 21.2 34.4 0.1 5.2 2.0 85.7 4,030
Oct-20 91.6 4.8 0.1 0.0 96.5 5.7 9.1 13.9 22.0 28.9 0.1 5.1 2.1 87.0 4,324
Nov-20 91.3 5.1 0.1 -0.3 96.1 5.8 10.7 29.1 24.8 26.9 0.1 5.1 2.6 105.2 4,053
Dec-20 91.4 5.8 0.3 1.3 98.7 5.6 10.7 40.8 25.7 28.0 0.1 5.1 3.0 119.1 3,420
Jan-21 90.7 5.8 0.3 1.6 98.4 5.6 10.7 49.3 25.7 28.8 0.1 5.1 3.3 128.6 2,481
Feb-21 90.5 5.3 0.2 2.2 98.2 5.6 10.8 45.1 25.4 28.7 0.1 5.1 3.1 124.1 1,756
Mar-21 90.3 5.1 0.0 1.7 97.0 5.7 9.9 33.7 24.1 27.3 0.1 5.1 2.7 108.7 1,395
For the exclusive use of TAMMY@INTERSECTPOWER.COM

Apr-21 90.0 4.8 0.0 1.2 96.0 5.8 10.1 20.4 23.1 27.3 0.1 5.0 2.2 94.1 1,452
May-21 89.9 4.8 0.0 0.3 95.0 6.0 11.3 11.9 22.1 29.8 0.1 5.0 2.0 88.3 1,659
Jun-21 89.9 4.8 0.0 1.0 95.6 6.6 11.5 9.0 21.7 35.5 0.1 5.0 2.1 91.6 1,779
Jul-21 89.9 4.8 0.0 1.1 95.8 6.6 11.5 8.3 21.6 39.8 0.1 5.0 2.2 95.1 1,802
Aug-21 90.1 4.8 0.0 1.1 96.0 6.6 10.9 7.8 22.3 39.2 0.1 5.1 2.2 94.2 1,857
Sep-21 90.4 4.8 0.0 1.1 96.3 6.4 10.2 8.5 22.3 34.5 0.1 5.1 2.1 89.1 2,073
Oct-21 90.8 4.8 0.1 0.0 95.7 6.2 10.7 13.9 22.6 29.4 0.1 5.1 2.1 90.1 2,245
Build/draw
Winter 18/19 88.3 4.9 0.3 1.6 95.0 4.7 4.5 40.5 24.9 26.1 0.1 4.9 2.9 108.7 -2,042
Summer 2019 90.7 4.5 0.0 1.5 96.8 5.2 5.7 11.5 21.6 33.5 0.1 5.1 2.1 84.8 2,571
Winter19/20 93.9 4.6 0.0 1.4 99.9 5.1 8.0 37.8 24.5 28.7 0.1 5.3 2.9 112.4 -1,776
Summer 2020 92.5 4.7 0.0 0.8 98.0 5.7 8.6 11.4 20.5 33.2 0.1 5.2 2.1 86.9 2,374
Winter 20/21 90.8 5.4 0.2 1.3 97.7 5.7 10.6 39.6 25.2 27.9 0.1 5.1 2.9 117.1 -2,928
Summer 2021 90.2 4.8 0.0 0.8 95.8 6.3 10.9 11.4 22.2 33.7 0.1 5.1 2.1 91.8 850
End-Oct
Cal 18 83.1 5.4 0.1 0.9 89.5 4.6 3.4 23.4 23.0 29.0 0.1 4.6 2.4 90.5 3197
Cal 19 90.8 4.7 0.1 1.5 97.1 5.1 5.7 23.5 23.0 30.9 0.1 5.1 2.4 95.8 3726
Cal 20 92.5 4.8 0.0 1.0 98.4 5.6 8.9 22.3 22.3 31.2 0.1 5.2 2.4 98.0 4324
Cal 21 90.5 5.0 0.1 1.0 96.6 6.1 10.9 23.2 23.5 31.4 0.1 5.1 2.5 102.7 2245

YOY
Summer 2019 7.2 -0.9 0.0 1.3 7.6 0.5 2.4 -0.6 -0.2 1.6 0.0 0.5 0.1 4.2
Winter19/20 5.6 -0.3 -0.3 -0.2 4.8 0.4 3.5 -2.7 -0.4 2.5 0.0 0.3 0.0 3.7
Summer 2020 1.8 0.1 0.0 -0.7 1.2 0.5 3.0 -0.1 -1.1 -0.3 0.0 0.1 -0.1 2.1
Winter 20/21 -3.0 0.8 0.2 -0.1 -2.2 0.5 2.6 1.8 0.7 -0.7 0.0 -0.2 0.1 4.8
Summer 2021 -2.4 0.1 0.0 0.0 -2.2 0.6 2.2 0.0 1.7 0.4 0.0 -0.1 0.1 4.9
Cal 19 7.7 -0.7 0.0 0.6 7.6 0.5 2.3 0.1 0.0 2.0 0.0 0.5 0.1 5.4
Cal 20 1.7 0.1 -0.1 -0.5 1.3 0.5 3.2 -1.1 -0.7 0.3 0.0 0.1 0.0 2.2
Cal 21 -2.1 0.2 0.0 0.0 -1.8 0.6 2.0 0.8 1.3 0.1 0.0 -0.1 0.1 4.7

4d9a886718a24b1eb7cb57f43edc3a99
Source: EIA, Platts, Genscape, NYMEX, Haver Analytics, VelocitySuite, Morningstar, Bloomberg, Goldman Sachs Global Investment Research

24 March 2020 10
 Goldman Sachs Natural Gas

Exhibit 16: US Nat Gas balance under GS natural gas price forecasts
Bcf/d; Storage, Bcf. Columns in grey show differences to balance under market forwards.
Net Canadian LNG Balancing Total Net Mexican LNG ResComm Industrial Power Vehicle fuel Lease and Pipeline and Total
Production Storage
imports imports term supply exports exports demand demand Demand cons. plant cons. dist. use demand
Nov-18 88.2 4.0 0.1 0.2 92.5 4.7 4.3 32.8 24.4 25.4 0.1 4.9 2.6 99.3 2991
Dec-18 88.6 4.6 0.5 1.7 95.4 4.5 4.6 39.5 24.6 24.6 0.1 4.9 2.8 105.7 2671
Jan-19 88.0 6.1 0.5 1.4 95.9 4.9 4.4 48.7 25.7 27.1 0.1 4.9 3.1 118.9 1960
Feb-19 88.0 4.8 0.3 2.9 96.0 4.8 4.2 45.7 25.6 27.7 0.1 4.9 3.1 116.2 1395
Mar-19 88.6 5.0 0.1 1.7 95.4 4.8 4.8 35.9 24.1 25.7 0.1 5.0 2.7 103.2 1155
Apr-19 89.0 4.4 0.1 1.4 95.0 4.7 4.5 19.2 22.4 24.5 0.1 5.0 2.1 82.5 1529
May-19 89.3 4.4 0.1 0.4 94.2 4.9 5.6 12.8 21.7 26.8 0.1 5.0 2.0 79.0 2000
Jun-19 89.3 4.6 0.1 1.5 95.5 5.2 5.5 9.1 21.1 33.1 0.1 5.0 2.0 81.3 2428
Jul-19 89.9 5.1 0.0 2.2 97.2 5.4 6.0 8.3 20.9 41.1 0.1 5.0 2.2 89.1 2680
Aug-19 92.0 4.5 0.0 1.8 98.3 5.4 5.2 7.9 21.6 41.6 0.1 5.1 2.3 89.2 2962
Sep-19 92.0 4.6 0.0 2.7 99.3 5.4 6.2 8.5 21.4 36.5 0.1 5.2 2.1 85.4 3378
Oct-19 93.5 4.2 0.1 0.6 98.4 5.5 6.6 14.5 22.0 31.0 0.1 5.3 2.2 87.2 3726
Nov-19 95.0 4.3 0.0 -0.1 99.2 5.3 7.2 32.0 24.4 27.3 0.1 5.3 2.6 104.2 3575
Dec-19 94.5 4.4 0.0 1.5 100.3 4.9 7.8 38.9 25.0 28.9 0.1 5.3 2.9 113.9 3156
Jan-20 93.7 4.8 0.0 1.6 100.0 5.1 8.4 44.2 24.8 29.4 0.1 5.3 3.1 120.3 2609
Feb-20 92.9 5.4 0.0 2.2 100.5 5.0 8.5 43.1 24.8 29.6 0.1 5.2 3.1 119.5 2084
Mar-20 93.3 4.3 0.0 1.7 99.3 5.3 8.1 30.9 23.4 28.1 0.1 5.2 2.6 104.0 1949
Apr-20 93.0 4.5 0.0 1.2 98.8 5.3 7.6 20.4 20.0 26.5 0.1 5.2 2.1 87.3 2294
May-20 93.1 4.5 0.0 0.3 98.0 5.5 8.4 11.9 19.1 29.1 0.1 5.2 1.9 81.3 2811
Jun-20 92.8 4.5 0.0 1.0 98.3 5.8 8.9 9.0 20.2 35.6 0.1 5.2 2.1 86.9 3151
Jul-20 92.4 4.8 0.0 1.1 98.3 6.0 9.1 8.3 20.0 40.2 0.1 5.2 2.2 91.0 3376
Aug-20 92.4 4.8 0.0 1.1 98.3 6.0 8.7 7.8 21.3 39.9 0.1 5.2 2.2 91.2 3594
Sep-20 92.2 4.8 0.0 1.1 98.1 5.7 8.5 8.5 21.2 35.1 0.1 5.2 2.1 86.3 3947
Oct-20 91.6 4.8 0.1 0.0 96.5 5.7 9.1 13.9 22.0 29.7 0.1 5.1 2.1 87.8 4215
Nov-20 91.3 6.0 0.1 -0.3 97.0 5.8 10.7 29.1 24.8 23.9 0.1 5.1 2.5 102.1 4063
Dec-20 91.4 6.7 0.3 1.3 99.6 5.6 10.7 40.8 25.7 25.7 0.1 5.1 2.9 116.7 3532
Jan-21 90.7 6.7 0.3 1.6 99.3 5.6 10.7 49.3 25.7 26.7 0.1 5.1 3.2 126.5 2688
Feb-21 90.5 6.2 0.2 2.2 99.1 5.6 10.8 45.1 25.4 26.6 0.1 5.1 3.1 121.9 2049
Mar-21 90.3 6.0 0.0 1.7 97.9 5.7 9.9 33.7 24.1 24.9 0.1 5.1 2.6 106.2 1793
For the exclusive use of TAMMY@INTERSECTPOWER.COM

Apr-21 90.4 5.7 0.0 1.2 97.3 5.8 10.1 20.4 23.1 25.0 0.1 5.1 2.2 91.7 1962
May-21 90.7 5.7 0.0 0.3 96.7 6.0 11.3 11.9 22.1 27.3 0.1 5.1 1.9 85.8 2299
Jun-21 90.9 5.7 0.0 1.0 97.5 6.6 11.5 9.0 21.7 33.2 0.1 5.1 2.0 89.2 2548
Jul-21 91.3 5.7 0.0 1.1 98.1 6.6 11.5 8.3 21.6 37.5 0.1 5.1 2.1 92.8 2713
Aug-21 91.7 5.7 0.0 1.1 98.5 6.6 10.9 7.8 22.3 36.9 0.1 5.1 2.1 92.0 2915
Sep-21 92.2 5.7 0.0 1.1 99.0 6.4 10.2 8.5 22.3 32.2 0.1 5.2 2.0 86.8 3280
Oct-21 93.0 5.7 0.1 0.0 98.8 6.2 10.7 13.9 22.6 27.2 0.1 5.2 2.0 87.9 3617
Build/draw
Winter 18/19 88.3 4.9 0.3 1.6 95.0 4.7 4.5 40.5 24.9 26.1 0.1 4.9 2.9 108.7 -2042
Summer 2019 90.7 4.5 0.0 1.5 96.8 5.2 5.7 11.5 21.6 33.5 0.1 5.1 2.1 84.8 2571
Winter19/20 93.9 4.6 0.0 1.4 99.9 5.1 8.0 37.8 24.5 28.7 0.1 5.3 2.9 112.4 -1776
Summer 2020 92.5 4.7 0.0 0.8 98.0 5.7 8.6 11.4 20.5 33.7 0.1 5.2 2.1 87.4 2266
Winter 20/21 90.8 6.3 0.2 1.3 98.6 5.7 10.6 39.6 25.2 25.6 0.1 5.1 2.9 114.7 -2423
Summer 2021 91.5 5.7 0.0 0.8 98.0 6.3 10.9 11.4 22.2 31.3 0.1 5.1 2.1 89.5 1824
End-Oct
Cal 18 83.1 5.4 0.1 0.9 89.5 4.6 3.4 23.4 23.0 29.0 0.1 4.6 2.4 90.5 3197
Cal 19 90.8 4.7 0.1 1.5 97.1 5.1 5.7 23.5 23.0 30.9 0.1 5.1 2.4 95.8 3726
Cal 20 92.5 5.0 0.0 1.0 98.5 5.6 8.9 22.3 22.3 31.1 0.1 5.2 2.4 97.9 4215
Cal 21 91.6 5.9 0.1 1.0 98.7 6.1 10.9 23.2 23.5 29.1 0.1 5.1 2.4 100.5 3617

YOY
Summer 2019 7.2 -0.9 0.0 1.3 7.6 0.5 2.4 -0.6 -0.2 1.6 0.0 0.5 0.1 4.2
Winter19/20 5.6 -0.3 -0.3 -0.2 4.8 0.4 3.5 -2.7 -0.4 2.5 0.0 0.3 0.0 3.7
Summer 2020 1.8 0.1 0.0 -0.7 1.2 0.5 3.0 -0.1 -1.1 0.2 0.0 0.1 0.0 2.6
Winter 20/21 -3.0 1.7 0.2 -0.1 -1.3 0.5 2.6 1.8 0.7 -3.1 0.0 -0.2 0.0 2.3
Summer 2021 -1.0 1.0 0.0 0.0 0.0 0.6 2.2 0.0 1.7 -2.4 0.0 -0.1 0.0 2.0
Cal 19 7.7 -0.7 0.0 0.6 7.6 0.5 2.3 0.1 0.0 2.0 0.0 0.5 0.1 5.4
Cal 20 1.7 0.3 -0.1 -0.5 1.5 0.5 3.2 -1.1 -0.7 0.1 0.0 0.1 0.0 2.0
Cal 21 -0.9 1.0 0.0 0.0 0.1 0.6 2.0 0.8 1.3 -1.9 0.0 0.0 0.0 2.6

4d9a886718a24b1eb7cb57f43edc3a99
Source: EIA, Platts, Genscape, Haver, NYMEX, VelocitySuite, Morningstar, Bloomberg, Goldman Sachs Global Investment Research

24 March 2020 11
 Goldman Sachs Natural Gas

Disclosure Appendix
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 Goldman Sachs Natural Gas

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https://www.theocc.com/about/publications/character-risks.jsp and
https://www.fiadocumentation.org/fia/regulatory-disclosures_1/fia-uniform-futures-and-options-on-futures-risk-disclosures-booklet-pdf-version-2018.
Transaction costs may be significant in option strategies calling for multiple purchase and sales of options such as spreads. Supporting documentation
will be supplied upon request.
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Disclosure information is also available at https://www.gs.com/research/hedge.html or from Research Compliance, 200 West Street, New York, NY
10282.
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