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EIA sees crude volumes up, prices down
Energy Information Administration says it expects global oil inventories to build later in year putting downward pressure on Brent
Kristen Nelson Petroleum News
In its March Short-Term Energy Outlook, released March 11, the U.S. Energy Information Administration said it expects global oil markets will remain relatively flat through mid-2025, with inventories increasing, before inventories begin to fall "in part due to decreasing crude oil production in Iran and Venezuela."
With decreasing production, the Brent crude oil spot price is expected to rise from about $70 per barrel to $75 per barrel in the third quarter.
Oil inventories are expected to build late in the year, putting downward pressure on oil prices, causing Brent to fall to an average of $68 per barrel in 2026. Brent averaged $81 last year and is forecast to average $74 per barrel this year.
One factor in falling prices is the expectation that OPEC+ will unwind its current production cuts and there will be growth in production from non-OPEC+ countries, EIA said.
Global oil markets Brent averaged $75 per barrel in February, down $4 per barrel from January and down $8 from February 2024. The drop in prices in February was "driven largely by economic growth concerns related to potential tariffs by both the United States and other trade partners," EIA said.
Concerns about global oil demand growth have "persistently weighed on oil price over the last year," the agency said, while on the supply side, a ceasefire in the Russia-Ukraine conflict could add volumes from Russia back onto the market. In addition, countries outside OPEC+, primarily in North and South America, have continued to grow production, adding downward pressure on the price forecast.
Crude oil prices fell in February, but EIA said it expects upward price pressure will move Brent back into the mid-$70s in the coming months.
The U.S. sanctions on Iran, announced Feb. 24, could remove significant crude volumes from the market, while the revocation of licenses for Venezuelan oil production and exports will reduce production from that country this month, "tightening near-term oil market balances significantly" compared with February, EIA said.
Oil production is expected to rise by the end of the year, but the agency said there was significant uncertainty in its price forecast based on sanctions and the uncertainty of OPEC+'s adherence to the production increases it has announced.
Global production Global liquid fuels production is forecast to grow in 2025 and 2026, EIA said, "due to a combination of the scheduled gradual increase in OPEC+ production and further growth from countries outside of OPEC+," with an increase of 1.4 million bpd expected this year and 1.6 million bpd in 2026.
OPEC+ production is expected to increase by less than 200,000 bpd in 2025, compared to a 1.3 million bpd decrease in 2024, and to increase by 500,000 bpd in 2026.
Countries outside of OPEC+ are expected to increase production by 1.2 million bpd in 2025 and 1 million bpd in 2026, with production growth driven by the United States, Canada, Brazil and Guyana.
EIA said global liquid fuels consumption continues to be less than the pre-pandemic trend, increasing by 1.3 million bpd this year and 1.2 million bpd in 2026, "driven primarily by demand from non-OECD Asia." India is expected to increase its consumption by 300,000 bpd both this year and next, driven by transportation fuels demand, while China is expected to increase its consumption by 300,000 bpd this year and 200,000 bpd in 2026, "as Beijing's economic stimulus efforts drive higher demand growth."
Natural gas There was increased consumption of natural gas in the U.S. in January and February driven by below-normal temperatures, decreasing volumes in underground storage, expected to result in lower volumes of gas in storage for the rest of the year, resulting in an increase in the forecast for natural gas prices.
Henry Hub is now forecast to average $4.20 per million British thermal units in 2025, up 37% from EIA's October forecast and to average $4.50 per million Btu in 2026 on growth in global demand for liquefied natural gas.
Plaquemines LNG Phase 1 and Corpus Christi Stage 3 both started LNG production in December, with Plaquemines exports estimated to average 1.1 billion cubic feet per day in February, at 85% nominal capacity for the facility.
Two additional projects -- Golden Pass and Plaquemines LNG Phase 2 -- are expected to start up in the next 2 years, but the timing is uncertain.
"We expect China's imposition of tariffs on U.S. LNG that were enacted in early February to have little to no effect on U.S. LNG exports because destination-flexible U.S. LNG cargoes can be routed to other global markets," EIA said.
U.S. LNG exports were 12 bcf per day in 2024 and are forecast to be 14 bcf per day this year and 16 bcf per day in 2026.
EIA said U.S. dry natural gas production held steady in 2024 and is expected to increase by 2% both this year and next, rising to 105 bcf per day in 2025 on increased natural gas prices and increasing to 107 bcf per day in 2026.
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