US EIA updates natural gas and oil forecast
Published by Oliver Kleinschmidt,
Assistant Editor
Hydrocarbon Engineering,
The US Energy Information Administration (EIA) has revised its forecast for 2025 average US benchmark Henry Hub natural gas spot prices upward following a cold end to February. In its March Short-Term Energy Outlook (STEO), the EIA also revised its forecast for Brent crude oil spot price, expecting it to fall in late 2025.
Some key highlights from the March STEO included:
- Natural gas consumption and inventories: cold weather during January and February led to increased natural gas consumption and large natural gas withdrawals from inventories. EIA now expects natural gas inventories to fall below 1.7 trillion ft3 at the end of March, which is 10% below the previous five-year average and 6% less natural gas in storage for that time of year than EIA had expected last month.
- Natural gas prices: the EIA expects higher natural gas consumption and lower natural gas inventories to lead to higher natural gas prices through 2026. EIA expects the Henry Hub spot price to average around US$4.20 per million Btu in 2025 (11% higher than last month’s forecast) and near US$4.50 per million Btu in 2026 (8% higher than last month’s forecast).
- Crude oil inventories: global oil markets will remain tight through the middle of 2025 before gradually shifting to oil inventory builds later this year. EIA expects global oil inventories to fall in the second quarter of 2025, in part due to decreasing crude oil production in Iran and Venezuela.
- Crude oil prices: the EIA expects the Brent crude oil spot price to rise from its current price near US$70 per bbl to about US$75 per bbl in the 3Q25. However, EIA fore-casts oil inventories to build and prices to decrease in late-2025 and through 2026 as OPEC+ unwinds production cuts and non-OPEC oil production grows. EIA forecasts the Brent crude oil price to fall to average US$68 per bbl in 2026. The EIA points to numerous sources of uncertainty in its price forecast, including the effects of recently announced sanctions against Iran and the revoked oil export licenses for Venezuela.
- Electricity generation: the EIA expects the US electric power sector to generate 3% more electricity in 2025 than in 2024, which differs from February’s forecast growth of 2%. Natural gas and coal both contribute to the increased generation in EIA’s March forecast.
- Electricity consumption: the EIA expects a 3% increase in total US electricity sales (a proxy for consumption) in 2025, led by strong growth in the residential and commercial sectors. Residential-sector growth is mostly related to cold weather during January and February that increased electricity consumption for space heating. Commercial-sector growth is being driven by expanding data centres.
The full March 2025 Short-Term Energy Outlook is available on the EIA website.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/13032025/us-eia-updates-natural-gas-and-oil-forecast/
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