EIA Short Term Energy Outlook - Dated Feb. 11

[dan_s]

Forecast overview

Global oil inventories. We expect OPEC+ production cuts will reduce global oil inventories and keep crude oil prices near current levels through the first quarter of 2025. Gradual increases in production combined with relatively weak global oil demand growth will increase global oil inventories in the second half of 2025 through 2026, placing downward pressure on prices through the remainder of our forecast. As a result, we forecast that the Brent crude oil price will average $74 per barrel (b) in 2025 before falling to $66/b in 2026. < OPEC+ won't let this happen and U.S. oil production has flatlined.

Global oil production. We forecast global production of liquid fuels will increase by 1.9 million barrels per day (b/d) in 2025 and 1.6 million b/d in 2026 because of a combination of supply growth from countries outside of OPEC+ and the relaxation of OPEC+ production cuts. We do not anticipate that the sanctions on Russia's oil and shipping sectors announced on January 10 will significantly affect our oil production forecast. < This morning, World Oil (a more reliable source of information) showed that during the first 9 months of 2024, world oil production actually declined YOY. With U.S. oil production now expected to increase by just 300,000 bpd in 2025 and just 100,000 bpd in 2026, it is unlikely that global oil production can increase that much. EIA might be adding in NGL production growth.

U.S. petroleum products consumption. We expect U.S. distillate fuel oil consumption to increase by 4% in 2025 and remain flat in 2026 driven by GDP growth and increased industrial activity. We expect U.S. motor gasoline consumption to remain flat in 2025 as fuel efficiency gains outpace increases in driving. In 2026, we expect continued efficiency gains and slower employment growth will reduce gasoline consumption slightly.

Natural gas prices. The Henry Hub spot price averaged $4.13 per million British thermal units (MMBtu) in January and reached a daily high of $9.86/MMBtu on January 17 ahead of a cold snap that spread across the United States, leading to above-average inventory withdrawals. We expect the spot price to rise through 2026, averaging almost $3.80/MMBtu in 2025, up 65 cents from our January 2025 Short-Term Energy Outlook, and reach nearly $4.20/MMBtu in 2026. < My forecasts are based on $3.70/MMBtu in 2025 and $4.00/MMBtu in 2026, but I think we could see "Bidding War Price Spikes" over $9.00 this summer. Increasing LNG exports will make it very difficult, if not impossible, for utilities to fill storage before the next winter heating season. Refilling storage is NOT OPTIONAL. Utilities are required by law to have a sufficient amount in storage to meet estimated demand for space heating.

Electricity generation. We expect generation in the U.S. electric power sector to increase by 2% in 2025 and by 1% in 2026, after growing 3% last year, led by growth in renewable energy sources. If electricity generation grows in each of the next two years, it would mark the first three years of consecutive growth since 2005–07. The share of U.S. generation from solar grows from 5% in 2024 to 8% in 2026 because of an expected 45% increase in the amount of solar generating capacity between 2024 and 2026. Conversely, we expect the share of U.S. generation from natural gas to fall from 43% in 2024 to 39% in 2026 as natural gas prices rise. Our forecasts for increases in solar and wind generation are based on the planned generator projects reported to us in our Preliminary Monthly Electric Generator Inventory. < This looks like wishful thinking to me, but natural gas fired power generation will only go down if ngas prices get so high that utilities that have switching ability go back to coal.

Macroeconomic assumptions: The macroeconomic assumptions in this month’s forecast were finalized prior to the Executive Order on February 1, 2025, that imposed a suite of tariffs on Canada, Mexico, and China and the subsequent pause on February 3 for U.S. tariffs on Canada and Mexico. The macroeconomic model we use in the STEO is based on S&P Global’s macroeconomic model, which this month assumed a 10% universal tariff and a 30% tariff on imports from China and does not reflect current policy. We will continue to monitor and will update our outlooks as policies change. < So, they are admitting that their forecasts above are based on flawed data. Honestly, I think the U.S. could outsource everything the Department of Energy does for less than 25% of their annual budget and get better information. Team Musk needs to check it out.

[dan_s]

I just confirmed that the Department of Energy's 2024 budget was $52 Billion. It does not produce any energy and most of its reports are Wild Ass Guesses.