The US EIA (Energy Information Administration) published its first monthly short-term economic outlook report for 2025 on Tuesday, including the first forecasts for 2026.
Oil price forecasts down
The EIA has lowered its oil forecasts, predicting Brent will average $74 per barrel in 2025 (down 8% from 2024) and $66 per barrel in 2026 (down 11 from the 2025 forecast). If these expectations are accurate, Brent could break below the lower band of its two-year sideways.
These forecasts are based on an expected supply surplus that would increase oil inventories from the second quarter of 2025: the EIA estimates that global oil production will grow by 1.8 million barrels per day (Mb/d) in 2025 and 1.5 mb/d in 2026. The EIA also expects global oil consumption to grow by 1.3 Mb/d in 2025 and 1.1 Mb/d in 2026, led by non-OECD countries, especially India.
The forecasts do not account for recent sanctions on Russian oil, including measures against producers like Gazprom Neft and Sugutneftegas, the blocking of 180 ships, and stricter regulations on maritime insurers and energy transaction authorisations.
These sanctions – along with low inventories – have driven oil prices higher, with West Texas Intermediate crude exceeding $77.50 per barrel and Brent above $80 per barrel, surpassing their 200-day moving averages and moving away from two-year lows. While this upward pressure could persist in the medium term, it is expected to ease over time or at higher price levels.
Natural gas price forecasts on the rise
The EIA has raised its US natural gas price forecast, anticipating an average of $3.10 per million metric British thermal units (MMBtu) in 2025 (with a range of $2.50 to $3.90) and $4.00/MMBtu in 2026 (with a range of $3.50 to$4.40). If accurate, these figures would signal a recovery from historic lows, with prices likely consolidating above the January 2024 high of $3.449/MMBtu.
The EIA estimates that natural gas demand outstrip supply in 2025, reducing inventories and reaching equilibrium by 2026. Supply is expected to rise by 1.4 billion cubic feet (Bcf/d) per day in 2025, while demand is anticipated to rise by 3.2 Bcf/d, driven mainly by exports. The increase in residential demand is linked to a colder winter compared to 2024. Industrial demand is also set to rise, albeit tempered by higher prices and greater renewable energy use.
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