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EIA forecasts crude price down, gas up Agency sees oil demand dropping, supply increasing, while domestic natural gas demand up on LNG exports and supply not increasing
In its May Short-Term Energy Outlook, released May 6, the U.S. Energy Information Administration said it expects the Brent spot oil price to average $66 per barrel this year, down from $81 in 2024, dropping to $59 per barrel in 2026.
Brent averaged $68 per barrel in April, the agency said, forecasting that increasing oil production will outpace annual demand growth, with inventories increasing globally. Brent is expected to average $62 per barrel in the second half of this year.
Global liquid fuels production is forecast to increase by 1.3 million to 1.4 million barrels per day this year and next, led by countries outside OPEC+, with OPEC+ expected "to increase production somewhat in the coming months," although remaining below the organization's current target path.
The Henry Hub spot price for natural gas fell to $3.44 per million British thermal units in April, down 68 cents from the March average, on relatively warmer weather in March and early April in the Lower 48, leading to higher-than-expected injections into storage.
EIA expects domestic natural gas prices to rise in the coming months as more liquefied natural gas is exported and demand for natural gas from the electric power sector increases seasonally, with Henry Hub forecast to average nearly $4.20 per million Btu in the third quarter, nearly double the price from the same period in 2024.
Global oil EIA said Brent's fall to $68 per barrel in April, down $5 from March, the third consecutive month that crude oil prices have fallen, was "driven primarily by expectations of lower global oil demand growth following the implementation of new tariffs from the United States and its largest trading partners."
Crude oil prices so far this year have been lower than EIA expected in January, largely reflecting "lower expectations for global oil demand growth both among market participants and in our forecast." The agency said it has reduced its expectations for global oil demand by 0.5 million barrels per day since January and lowered its forecast for Brent by some $8 per barrel.
Oil inventories have risen as less oil is consumed, with an estimated 0.3 million bpd put into inventory through April -- in contrast to EIA's view in January, when it expected inventories to fall by more than 0.2 million bpd over that period.
"Perceptions of oversupply among oil market participants also reflect production growth from non-OPEC producers, along with announced production increases from OPEC+," EIA said.
Global oil inventories are expected to increase this year, up by an average of 0.5 million bpd in the second quarter and growing to 0.7 million bpd in the fourth quarter, averaging 0.4 million bpd this year, with growth accelerating to an average of 0.8 million bpd in 2026.
Brent is expected to decline this year and next, falling from an average of $76 per barrel in the first quarter to an average of $61 per barrel in the fourth quarter and then averaging $59 per barrel in 2026.
EIA said there is significant uncertainty in its price forecast, based on uncertainties around the impact of new or additional tariffs on global economic activity and oil demand.
Production and consumption Global liquid fuels production is forecast to increase this year and next on the OPEC+ scheduled production increase and growth from non-OPEC countries, with production increasing by 1.4 million bpd this year and 1.3 million bpd in 2026, growth led by countries outside OPEC+, up 1.2 million bpd this year and 0.6 million bpd in 2026, primarily the United States, Canada, Brazil and Guyana.
Oil consumption, however, continues to be below the pre-pandemic trend, increasing by 1 million bpd this year and 0.9 million bpd in 2026, both volumes lower than the January forecast, EIA said.
Natural gas U.S. natural gas demand growth is primarily driven by exports, EIA said.
Plaquemines LNG Phase I and Corpus Christi Stage 3 started production last December. Golden Pass and Plaquemines LNG Phase 2 are expected online within the next 2 years.
Based on those facilities, EIA said it is forecasting LNG exports to increase by 22% this year and by 10% in 2026.
Pipeline exports are also forecast to increase by 8% this year and by 7% in 2026.
Combined, the increase is expected to be 3.4 billion cubic feet per day this year and 2.1 bcf per day in 2026.
U.S. LNG exports averaged 12 bcf per day in 2024, are forecast to average 15 bcf per day this year and 16 bcf per day in 2026.
Natural gas prices decreased in March and April on steady demand, EIA said, with increased exports offset by warmer-than-normal early spring weather, lowering levels of residential and commercial demand. Relatively high levels of production also contributed to lower gas prices.
Moving prices up are several factors, including lower than normal expected injection for the remainder of the injection season, resulting in higher natural gas prices, with the $4.10 per million Btu now forecast for this year and $4.80 for 2026 between 80 cents and $1 higher per million Btu than forecast in January.
Both domestic and export demand are now expected to be higher than was forecast in January, while a drop in crude prices has reduced the agency's expectations for U.S. crude production growth, which means there will be less associated natural gas production than forecast in January.
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