Goldman Sachs is now buying and selling enough natural gas to make it one of the key players on the market-even reportedly overtaking oil major Exxon Mobil and Chevron and emboldened enough to now call an end to the supply glut.
According to a recent regulatory filing, Goldman Sachs bought and sold 1.2 trillion cubic feet of physical gas in the U.S. in 2015, which equates to 25 percent of the country's residential consumption and more than double its 2013 volumes.
These figures turn Goldman Sachs and its J Aron commodities division into the seventh largest gas marketer in North America, according to Natural Gas Intelligence.
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Goldman Sachs entered the natural gas selling market in 2010 with its acquisition of Canadian Nexen's North American natural gas marketing operations.
Analysts commented on the bank's commitment to commodities. "The fact that J Aron's business is growing in the face of low volatility in physical natural gas markets is noteworthy. Many players have downsized," Tom Russo, an energy consultant and former official at the Federal Energy Regulatory Commission, told the Financial Times.
J Aron dealt 3.42 billion cubic feet per day in 2011, but volumes in North America rose by 71 percent to 5.86 billion cubic feet last year, according to Natural Gas Intelligence.
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With its status as a new natural gas trading giant, Goldman Sachs has also come out with a bold statement that the supply glut is now over. Its comments helped put crude oil prices up 2 percent early Monday.
Sachs attributes the flip to a deficit in part due to Canadian wildfires and pipeline attacks in Nigeria saying, "The physical rebalancing of the oil market has finally started."
Goldman Sachs Group Inc. has now raised its U.S. crude price forecast to US$50 a barrel for the second half of 2016. Its earlier estimate in March was US$45.
By James Burgess of Oilprice.com
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