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EIA revises natural gas price forecast
Increase follows spell of cold weather in Lower 48 at end of January; 2025 forecast now $3.80 per million Btu, up 21% from $3.10 Kristen Nelson Petroleum News
The U.S. Energy Information Administration has raised its 2025 Henry Hub natural gas spot price forecast average to $3.80 per million British thermal units, up 21% from a January forecast of $3.10 per million Btu. In its February Short-Term Energy Forecast, issued Feb. 11, EIA said cold weather in the Lower 48 at the end of January increased natural gas demand for space heating, contributing to a 12% increase in domestic natural gas consumption compared to the previous 5-year average for the month, with above-average inventory withdrawals.
The January Henry Hub spot price averaged $4.13 per million Btu, with a daily high of $9.86 per million Btu Jan. 17 ahead of the cold snap. This was an increase of more than $1 per million Btu from the December average of $3.01 per million Btu.
EIA said it expects the Henry Hub natural gas spot price to average $3.70 per million Btu in the first quarter of 2025 and to rise through 2026, with an average of almost $3.80 per million Btu this year, up 65 cents from the January forecast, reaching an average of nearly $4.20 per billion Btu in 2026.
Domestic natural gas consumption in residential and commercial sectors averaged 50.6 billion cubic feet per day in January, up 13% from the 5-year average, while consumption in the electric power sector averaged 37.6 bcf per day, up more than 20% compared with the 5-year average.
In addition to winter weather, timing of new liquefied natural gas production over the forecast period is also a risk, with the imposition of tariffs by China on U.S. LNG expected to have a limited impact on U.S. LNG exports.
"With ample demand for LNG globally, we expect that any LNG not purchased by China would be imported elsewhere," the agency said.
U.S. LNG exports averaged 12 billion cubic feet per day last year and are forecast to average 14 bcf per day this year and 16 bcf per day in 2026.
Oil inventories, production OPEC+ production cuts are expected to reduce global oil inventories and keep prices near current levels through the first quarter with gradual production increases and relatively weak global demand growth forecast to increase global inventories in the second half of 2025 and in 2026, "placing downward pressure on prices through the remainder of our forecast," EIA said, with Brent expected to average $74 per barrel this year, down from a $79 per barrel average in January, and dropping to $66 per barrel in 2026.
Global production of liquid fuels is forecast to increase by 1.9 million barrels per day this year and by 1.6 million bpd in 2026 on a combination of supply growth from non-OPEC countries and relaxation of OPEC's current production cuts. The agency said it does not anticipate that U.S. sanctions on Russian oil and shipping announced Jan. 10 will significantly affect the oil production forecast.
Global growth in liquid fuels production is expected to be led by countries outside of OPEC+ in 2025, primarily by the United States, Canada, Brazil and Guyana.
U.S. crude oil production is forecast to average 13.6 million barrels per day this year, up from 13.2 million bpd in 2024, increasing to 13.7 million bpd in 2026.
Global oil consumption growth is forecast to be slower than the pre-pandemic trend, with liquid fuels consumption expected to increase by 1.4 million bpd this year and 1 million bpd in 2026, "driven primarily by demand from non-OECD Asia." The largest increase, 0.3 million bpd both this year and next, is expected to come from India, driven by rising transportation fuel demand, with China's consumption expected to grow by 0.2 million bpd this year and next, up from less than 0.1 million bpd in 2024, as that country's economic stimulus efforts increase consumption.
In the U.S., consumption of distillate fuel oil and jet fuel are forecast to grow in 2025 and 2026, while gasoline consumption remains about the same this year as last and drops slightly in 2026, "driven by assumption of increased manufacturing and trucking activity for distillate fuel oil, increased air travel for jet fuel, and a more fuel-efficient vehicle fleet for motor gasoline."
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