• Goldman Sachs warned Europe's energy crisis isn't resolved just yet even as LNG prices tumble.

• Europe still faces a structural deficit in natural gas and has to make up for lost Russian imports.

• European LNG prices are down 37% since November, but part of that is from demand destruction.

Europe's energy crisis and extreme fuel costs emerged as a dominant narrative in the two years after Russia invaded Ukraine, but tumbling liquefied natural gas prices have recently quelled concerns.

Warm weather and shuffled trade flows have been an encouraging sign. This winter proved to be the second-warmest in the last decade, and European gas prices are down 37% since November, which has allowed Europe to build up a sizable inventory of fuel.

But strategists at Goldman Sachs aren't convinced the continent is in the clear.

"While the decline in gas prices may leave the impression that Europe has solved its energy crisis, we believe the crisis is not over yet, and we have one more winter to go through before fully allaying the risk of extreme gas prices re-emerging," the firm's strategists wrote in a Thursday note.

In their view, improvements in near-term LNG supply haven't resolved the structural deficit and lost imports from Russia. Prices in turn remain vulnerable to supply interruptions or fluctuations in demand.

European gas still "has one more winter to go," the strategists said, given that cold weather can cause demand to spike, which would deplete inventory and push prices higher.

Weather-dependent heating, they note, comprises more than 60% of consumer demand.

By their estimations, a winter that's colder by one standard deviation — about 1° C below average — could increase demand worth about 12% of storage capacity.

Storage is above seasonal norms, which provides a comfortable inventory setup for the summer. But next winter looms, and storage must reach full capacity ahead of the colder months. Not only has Europe failed to fully compensate for the roughly 20% of lost supply they no longer receive from Russia, much of the recent LNG price declines stem from demand destruction rather than added supply, according to Goldman Sachs.

Looking beyond this year, Goldman forecasts new LNG export projects could come online in 2025, which would lead to increases in global LNG supply and begin tilting markets into oversupply.

"With significantly more LNG available, Europe will no longer have to crowd out price-sensitive buyers in the rest of the world to guarantee sufficient imports, and will be able to accommodate incremental domestic demand, leading to sustainably lower LNG and European gas prices," Goldman strategists said.