EIA forecasts lower oil demand, lower Brent prices in 2025, '26
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Kristen Nelson Petroleum News
The U.S. Energy Information Administration's April Short-Term Energy Outlook, issued April 10, is forecasting lower oil demand growth and a drop in the Brent spot price to an average of $68 per barrel this year, down 8.6% from a March forecast of $74, and down 10.2% for 2026, from a March forecast of $68 per barrel to a forecast this month of $61 per barrel.
Global oil demand growth is now forecast to average 0.9 million barrels per day, down 0.4% from a March forecast of 1.3 million bpd growth, and a drop in 2026 from a March forecast of growth at 1.2 million bpd to growth of 1 million bpd, a 0.1% decline.
"Oil consumption in our forecast continues to be below its pre-pandemic trend," EIA said.
Modeling and analysis for the April forecast was completed April 7, the agency said, citing recent developments in trade policy and oil production as leading to "a significant drop in oil prices during the first week of April." OPEC+ members said April 3 that some member countries will start to increase production in May, rather than July as originally planned, a move which EIA said is expected to lead to an increase in global oil inventories beginning in mid-2025.
Brent drops Following the OPEC+ announcement, and an April 2 Executive Order from President Trump announcing 10% tariffs on imports from all countries, with higher rates on some, Brent dropped 14% to $66 per barrel on April 7.
"We expect that prices for crude oil and other commodities will continue to experience significant volatility as market participants assess the effects of trade policies," EIA said.
In addition to unwinding of production cuts by OPEC+ members, EIA said production continues to grow in non-OPEC countries, led by the United States, Canada, Brazil and Guyana, with overall global liquid fuel production forecast to increase by 1.3 million bpd this year and by 1.2 million bpd in 2026.
Drop in demand EIA said reduction in liquid fuels demand growth compared to last month's forecast "is concentrated in Asia as a result of U.S. tariffs," but despite that, non-OECD Asia is still seen as a primary driver of oil demand growth.
India is expected to increase liquid fuels consumption by 0.3 million bpd this year and next, up from an increase of 0.2 million bpd in 2024, EIA said, "driven by rising demand for transportation fuels."
China's consumption is also forecast to grow, by 0.2 million bpd in 2025 and 2026, up from a 0.1 million bpd growth in 2024, "as economic stimulus efforts drive higher demand growth."
Natural gas demand Domestic natural gas demand -- domestic consumption plus exports -- is expected to grow 4% in 2025, EIA said, led by an 18% increase in exports and a 9% increase in residential and commercial consumption for heating.
U.S. liquefied natural gas exports are expected to increase by 3.3 billion cubic feet per day this year to an average of 15.2 bcf per day, with two new LNG export facilities, Plaquemines LNG Phase 1 and Corpus Christi LNG Stage 3, beginning production in December 2024. Both are expected to ramp up exports this year, EIA said, with Plaquemines ramping up production more quickly than expected. U.S. LNG exports are now expected to be 1 bcf per day more than forecast in March, with feedgas deliveries for Plaquemines Phase 2 expected to begin in September or sooner.
Residential and commercial sector consumption of natural gas is expected to average 23 bcf per day this year, up 1.8 bcf per day from 2024.
Growth in natural gas demand in 2026 will be driven, as it is this year, mostly by growth in LNG exports. Additional capacity from Golden Pass will come online in mid-2026.
LNG exports grow by 1.2 bcf per day in 2026, reaching an average of 16.4 bf per day, with additional demand growth from pipeline exports, expected to grow 0.8 bcf per day.
Natural gas prices The U.S. benchmark Henry Hub price averages more than $3.90 per million British thermal units in the second quarter, up almost 90% compared with the second quarter 2024, EIA said. For all of 2025, Henry Hub is forecast to average some $4.30 per million Btu, and nearly $4.60 per million Btu in 2026.
Higher prices this year are expected to encourage increased production from the Appalachia and Haynesville regions.
Dry natural gas production is forecast to average some 105 billion cubic feet per day in the second quarter of the year, nearly 3 bcf per day greater than the second quarter of 2024.
Annual outlook U.S. energy consumption is expected to decrease over the next few years and then increase again beginning in the early 2040s, EIA said in its Annual Energy Outlook 2025, released April 15, with most scenarios the agency modeled forecasting domestic consumption in 2050 to be lower than in 2024.
"The U.S. energy system underwent major changes in the first quarter of the 21st century as oil and natural gas production surged, renewables were deployed more widely, and energy consumption patterns changed," EIA said. The 2025 annual outlook "can help stakeholders examine the ways in which the system could further change through 2050."
In most cases, the agency said it considers laws and regulations implemented as of December 2024, and the outlook reflects "business-as-usual trends, given known technological and demographic trends and current laws and regulations, and so provides a policy-neutral Reference case and an accompanying set of core side cases that can be used to analyze policy initiatives."
There is a reference case and a number of alternate cases, among them price and supply cases.
The reference case assumes both global oil supply and demand will increase, with crude oil prices rising steadily beginning in 2025, with the 2025 Brent oil price in the reference case $72.10 per barrel in 2025 and $95 in 2050 (prices are based on 2024 dollars). The low oil price case assumes lower demand and higher supplies, with muted impact on global quantities produced and consumed "because the demand and supply effects somewhat offset each other at equilibrium," with Brent at $46.24 per barrel in 2025 and at $47.04 in 2050, both at 2024 dollars. In the high oil price case, liquid fuel demand is higher, there are fewer industrial efficiency gains and liquid fuels continue to meet fuel demand in the nonmanufacturing sector, with Brent at $121 per barrel in 2025, rising to $154.92 in 2050.
Offsetting the reference case on oil and gas supply are low and high cases.
The low oil and gas supply case uses an estimated ultimate recovery per well 50% lower than in the reference case in three areas:
*Lower 48 tight oil, tight gas and shale gas;
*undiscovered resources in Alaska; and
*offshore Lower 48 resources.
In the high oil and gas supply case, estimated ultimate recovery is assumed to be 50% higher in those same three areas.
--KRISTEN NELSON
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