In recent sessions, the TTF in Amsterdam has seen a significant rally that has taken the July contract to touch €29 per MWh today with a rise of over 8% and 24% at the beginning of the week.

These are prices far from the levels seen last year when the same contract recorded all-time highs above €300, causing energy prices to soar and consequently increasing consumer price inflation.

Prices, despite the rally, are still below €30, but for Goldman Sachs, the recent move “underscores the heavy short positioning in the market” since there has been “little-to-no change in European or global gas fundamentals.”

For this reason, according to the investment bank, “it is important to note that the system remains vulnerable to unforeseen events that can tighten global gas balances.”

Goldman Sachs links the gas issue with what happened in Vienna over the weekend when Saudi Arabia announced a crude oil production cut of one million barrels per day, going against other participants in the OPEC+ cartel.

In this sense, the bank explained, “even if oil had moved higher, the fundamental link between oil and European gas prices has weakened substantially over the years.”

“Though there are LNG contracts indexed to oil, buyers’ flexibility to give up contracted LNG volumes to buy spot is not large or immediate enough to support spot LNG market bids significantly. And even if it was, this switch would not change the total volume of LNG available for deliveries in Europe,” the bank added.

A change in gas fundamentals in Europe would cause the TTF to rise, but Goldman said it had “not yet seen enough of a fundamental change to justify such a move now.”