Goldman Sachs predicts that natural gas prices in Europe will fall by about 30% in the coming months as countries temporarily get a head start on supply problems, CNBC reports.

The Netherlands Gas Facility (TTF) is the main benchmark for natural gas prices in Europe. On Tuesday, it was trading at about 120 euros per megawatt hour. But Goldman Sachs expects that benchmark to fall to 85 euros per megawatt hour in the first quarter of 2023.

This would mark a significant change from the levels seen back in August. At the time, the unprovoked war in Ukraine and the subsequent pressure on Europe's energy balance raised prices to historic levels - above 340 euros per megawatt hour.

Several factors have contributed to the recent drop in gas prices: Europe's gas storage facilities are mostly full for this winter season; temperatures this fall have been milder than expected, delaying the start of the heavy usage period; and there is a surplus of liquefied natural gas (LNG).

Recent reports indicate that about 60 ships are waiting to unload LNG in Europe. Some of these shipments were purchased in the summer and are only now arriving. Indeed, the latest data compiled by industry group Gas Infrastructure Europe shows a 94% storage rate in Europe.

Despite optimism about lower gas prices in the near term, which may partially mitigate the cost-of-living crisis, there is intense pressure on European leaders to secure supplies in the medium term.

Natural gas prices are expected to rise after the first three months of 2023. Fatih Birol, executive director of the International Energy Agency, said only a very small amount of new LNG will enter the market next year.