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EIA forecasts stable winter heating costs
Agency expects colder Lower 48 winter; energy costs similar to or slightly lower than last winter; variation across heat sources Kristen Nelson Petroleum News
The U.S. Energy Information Administration is forecasting that most households in the Lower 48, on average, will spend about the same to heat their homes this winter as they did last. This was the conclusion of the agency's 2024 Winter Fuels Outlook, released Oct. 8 in conjunction with the agency's October Short-Term Energy Outlook.
The agency is forecasting a colder winter but expects energy costs to be "similar to or slightly lower than last winter." The exception in cost difference is Midwesterners heating with natural gas: EIA expects they will pay on average about 11% more this winter than last.
"There's a lot of uncertainty about the weather over an entire season -- not to mention uncertainty over commodity prices," said EIA Administrator Joe DeCarolis.
In the Lower 48 EIA expects a 1% increase in fuel bills for homes using natural gas, a 5% decrease for those using heating oil, a 2% increase for those with electric heat and a negligible change for propane users. The Winter Fuels Outlook includes warmer and colder cases.
Brent lower EIA said it expects the Brent crude oil spot price of average $76 per barrel in the fourth quarter and about $78 per barrel in 2025, both lower than the forecasts in the agency's September forecast, which EIA said it revised based on a lower September Brent spot price and because it is now expecting lower demand for petroleum products. Military action in the Middle East is a key source of uncertainty in the price forecast, the agency said. Brent averaged $82 per barrel last year and is expected to forecast $81 per barrel this year.
EIA said that although it reduced its crude price forecast, "crude oil prices have risen in recent days because of escalating conflict in the Middle East, raising the possibility of oil supply disruptions and further crude oil price increases."
Brent averaged $74 in September, down $6 per barrel from August, "as concerns over global oil demand growth outweighed declines in oil inventories and OPEC+ members' decision to delay production increases until December 2024," EIA said.
Less oil is being produced than consumed as OPEC+ cuts continue and global oil inventories are estimated to have fallen by 800,000 barrels per day in the third quarter and are expected to fall by 600,000 bpd through the first quarter of 2025, the agency said, with Brent expected to average $79 per barrel in the first half of 2025, down $6 per barrel from the September estimate.
By mid-2025, however, EIA said it anticipates accelerated production growth as OPEC+ increases production and as production continues to grow in the U.S., Guyana, Brazil and Canada, with inventory increases of almost 600,000 bpd expected in the second half of 2025.
US crude production EIA said it reduced its 2025 forecast for Lower 48 crude oil production by 1%, reflecting a downward revision of its West Texas Intermediate oil price forecast. WTI is now expected to average $72 per barrel in the fourth quarter, some $6 lower than the September forecast.
"Because there is about a six-month lag between price changes and producer activity, the recent price declines will begin reducing U.S. crude oil production in mid-2025," and by December of that year, Lower 48 crude production is estimated to be 2% lower, 11.4 million bpd, than the September forecast, the agency said.
A third quarter exploration and production contraction, indicated by the Dallas Fed Energy Survey's Business Activity Index, signals "concerns about demand in the oil and natural gas sector," and is the first contraction in that activity index since the third quarter of 2020, EIA said.
Reduced production following expected lower crude oil prices has the most impact on the Permian region, but production there is expected to increase over time with ongoing improvements in well productivity and the recent beginning of operation of the Matterhorn Express pipeline, "which will help alleviate constrained takeaway capacity for associated natural gas and allow for additional crude oil production."
Natural gas The natural gas price at Henry Hub averaged $2.50 per million British thermal units last year, is forecast to average $2.30 per million Btu this year and $3.10 in 2025.
EIA said natural gas prices rose in September as production fell slightly, with a Henry Hub average price of $2.28 per million Btu in that month. The production decline was partly due to an 11% drop in the Gulf of Mexico, as some 53% of Gulf production capacity was offline because of Hurricane Francine, followed by Hurricane Helene in a nearby area two weeks later.
U.S. natural gas exports, particularly liquefied natural gas, averaged 12 billion cubic feet per day in 2024, and is forecast to average the same this year, increasing to 14 bcf per day in 2025, as more U.S. export facilities come online.
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