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EIA sees lower oil prices, US production
Brent forecast to average $56/barrel this year, $54 in 2027; WTI expected to drop below $50/barrel in the 4th quarter of this year
Kristen Nelson Petroleum News
In its January Short-Term Energy Outlook, released Jan. 13, the U.S. Energy Information Administration forecast that the Brent crude oil price would average $56 per barrel this year, down from $69 per barrel last year, and drop further to $54 per barrel in 2027.
U.S. crude oil production, which set a record at an average of 13.6 million barrels per day last year, is projected to drop 1% in 2026, remaining at the 13.6 million bpd average, but then drop 2% in 2027 to average 13.3 million bpd on lower prices.
EIA said it expects production to decrease "as the slowdown in drilling activity will outpace increases in drilling productivity."
West Texas Intermediate is forecast to average $52 per barrel this year and $50 per barrel in 2027, down from $65 per barrel in 2025, with an expected drop below $50 per barrel in the fourth quarter of this year, the agency said.
US natural gas "U.S. energy production remains strong, and natural gas output is expected to grow to nearly 109 billion cubic feet per day this year," said EIA Administrator Tristan Abbey. "Natural gas supply is critical as we forecast that U.S. liquefied natural gas exports expand and electricity demand rises through 2027, driven largely by increasing demand from large computing facilities, including data centers."
EIA said U.S. dry natural gas production is forecast to increase through 2027, with the growth to almost 109 bcf per day an increase of 1% from last year, led by the Permian, where takeaway capacity is being added, particularly in the second half of this year. The projected production growth next year comes "as growth shifts to the Haynesville region, where increases in natural gas prices drive the deployment of drilling rigs."
Though production grows in 2027, EIA said it slows relative to demand, with U.S. natural gas demand, including exports, growing 2% in 2027, "resulting in demand exceeding total supply -- production plus imports." Demand is forecast to reach 119 bcf per day in 2027, more than 1 bcf per day higher than supply.
The demand growth is driven by expanding LNG exports and rising electric power consumption, with LNG exports up 26% in 2025 and continuing to grow through 2027.
LNG exports averaged 15 bcf per day in 2025, are projected to grow to 16 bcf per day this year and to 18 bcf per day in 2027 with the ramp-up of new export facilities.
U.S. natural gas prices are forecast to remain relatively flat this year, EIA said, and then rise in 2017 under tightening market conditions.
The Henry Hub spot price is forecast to average just under $3.50 per million British thermal units in 2026, down 2% from 2025, and then rise 33% in 2027 to average almost $4.60 per million Btu, increasing as demand growth outpaces supply, EIA said.
US crude oil production U.S. crude oil production, which averaged 13.6 million bpd last year, is forecast to also average 13.6 million bpd again this year but then drop to 13.3 million bpd in 2027, a projected drop by 340,000 bpd in 2027.
At the end of 2025 there were 13% fewer rigs drilling for oil in the U.S. than at the beginning of the year, EIA said, citing Baker Hughes, but "production reached a record high last year as rising well-level productivity outweighed this drop."
"Over the next two years, we expect sustained lower crude oil prices will result in a pullback in drilling and completion activity that is enough to outweigh ongoing increases in productivity," the agency said.
The Permian has been the largest contributor to U.S. crude oil production growth over the last few years, but this year, EIA said, it is projecting that Permian production will remain largely unchanged.
Decreasing oil prices have contributed to a dropping rig count, and with fewer rigs drilling in the Permian, "production growth has primarily come from increasing production efficiency out of maturing wells" and in 2027, EIA said, it expects Permian production to decrease by 1% annually, "reflecting the full impact of the crude oil price decline on drilling activity."
Lower 48 onshore production is expected to fall by 170,000 bpd in 2026, a drop which will be partially offset by a 50,000 bpd production increase in Alaska and an additional 90,000 bpd from the Gulf of America, both increases driven by new projects set to come online this year.
The agency said it is forecasting an acceleration in production declines in 2027.
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