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EIA: low 2025 crude oil prices expected In June Short-Term Energy Outlook, agency says price, lower rig count, expected to affect short-term US crude production rates
Kristen Nelson Petroleum News
Low oil prices and a dropping rig count are expected to affect U.S. crude oil production rates this year and next, the U.S. Energy Information Administration said in its June Short-Term Energy Outlook, released June 10.
EIA said the Brent crude oil price is expected to drop to near $60 per barrel by the end of the year, averaging $66 per barrel for the calendar year, down from an average of $81 per barrel in 2024 and is expected to continue dropping and average $59 per barrel in 2026.
U.S. crude oil production, which averaged 13.2 million barrels per day in 2024, and reached a record high of 13.5 million bpd in the second quarter of this year, is expected to average 13.4 million bpd for 2025, and just below 13.4 million bpd in 2026. Production is forecast to average 13.3 million bpd by the fourth quarter of 2026 "because of decreasing active drilling rigs and declining oil prices."
Baker Hughes showed fewer active rigs than EIA expected in its May STEO, and based on "fewer active drilling rigs, we forecast U.S. operators will drill and complete fewer wells through 2026."
Oil prices Crude oil prices fell for the fourth month in a row in May, EIA said, "driven by rising global oil inventories that have resulted from slowing global oil demand growth and the accelerated unwinding of OPEC+ voluntary production cuts, which began in April."
The Brent spot oil price averaged $64 per barrel in May, down $4 per barrel from April and down $17 per barrel from May 2024.
OPEC+ members agreed May 31 to a third month of planned production increases in July, EIA said, contributing to the agencies "expectation that global oil production will exceed consumption over the forecast period, causing global oil inventories to build and putting downward pressure on oil prices."
Thus the projected average of $66 per barrel in 2025, dropping to $59 in 2026.
Inventories EIA said global oil inventories increased January through May and are expected to continue growing this year and next.
The increase is expected to average 0.4 million bpd through the end of this year, averaging 0.8 million bpd for the year, with slowing production growth expected in the second half of the year, "led by relatively flat U.S. crude oil production- and rising consumption. EIA expects inventory growth to moderate to 0.6 million bpd in 2026, as markets move toward balance. EIA did not enumerate inventory build for the first few months of this year, but a graph shows an estimated 1.0 million+ bpd inventory build for each of the first two quarters.
2025 inventory builds are higher in this month- s STEO than in the May STEO, the agency said, "due to a combination of lower oil demand in the OECD in 2025 and increased supply growth from both OPEC+ countries and from countries outside of the group."
There is significant uncertainty in the price forecast, EIA said, citing oil supply risks from Canadian wildfires around major Alberta oil sands facilities, the continuing conflict in Ukraine and a potential force majeure on Libyan oil exports, along with uncertainty on OPEC+ members coordinating "future production targets in the face of falling oil prices and increasing oil supply from sources outside of OPEC+."
Global production, consumption EIA said oil consumption growth continues below the pre-pandemic trend, with liquid fuels consumption increasing 0.8 million bpd this year and 1.1 million bpd next year, driven primarily by non-OECD countries, with OECD consumption unchanged and non-OECD consumption expected to grow by 0.9 million bpd in 2025 and by 1.0 million bpd in 2026.
India is expected to increase consumption of liquid fuels by 0.2 million bpd this year and by 0.3 million bpd in 2026, driven by rising transportation fuel demand. China- s liquid fuels consumption is forecast to grow 0.2 million bpd both this year and next, compared to an increase of 0.1 million bpd in 2024.
Global liquid fuels production is forecast to increase by 1.6 million bpd this year and by 0.8 million bpd in 2026.
EIA continues to expect OPEC+ members to produce below the current target - to limit increases in global oil inventories and attempt to support falling prices," with OPEC+ expected to increase production by 0.3 million bpd this year, compared to 1.4 million bpd in 2024, and to increase by 0.5 million bpd next year.
Countries outside of OPEC+ are expected to drive liquid fuels production growth in 2025, increasing production by 1.1 million bpd, but non-OPEC+ growth is expected to slow to 0.2 million bpd in 2026, "with growth from Brazil, Guyana, and Canada being partly offset by a slight drop in U.S. production."
Natural gas The Henry Hub spot price for U.S. natural gas is forecast to average $4 per million British thermal units this year, up from $2.20 last year, and is expected to average $4.90 per million Btu next year.
For 2025, EIA forecasts that natural gas consumption in the U.S. will be up by about 1% over 2024, averaging 91 billion cubic feet per day, "- with increases across the major sectors except for electric power."
Natural gas prices are expected to increase over the summer "as production declines slightly and demand for air conditioning increases the use of natural gas in the electric power sector," with Henry Hub expected to average more than $4.30 per million Btu in the second half of 2025.
EIA said the average Henry Hub price is up by more than 80% in its 2025 forecast compared with last year, with domestic consumption and exports combined expected to be up nearly 4 bcf per day this year, while domestic production of dry natural gas grows by less than 3 bcf per day.
U.S. LNG exports, which averaged 12 bcf per day in 2024, are forecast to average 15 bcf per day this year and 16 bcf per day in 2026.
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