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-Editorial
The U.S. Energy Information Administration (EIA) forecasts a significant rise in natural gas prices for the remainder of the winter heating season, despite higher-than-average inventories. According to the December Short-Term Energy Outlook (STEO), natural gas prices are expected to climb approximately 40% from November’s spot price, keeping them in line with previous end-of-winter prices.
The U.S. entered the winter season with 6% more natural gas in storage than the five-year average, and EIA anticipates ending winter with inventories 2% above that average. This forecast reflects the resilience of U.S. natural gas reserves even amid higher consumption during colder months.
“Recent natural gas prices have been historically low, so a colder winter than last will draw on storage and raise prices to some extent,” said EIA Administrator Joe DeCarolis. “We expect natural gas prices will remain well below the high prices we saw in 2021 and 2022.”
The Henry Hub natural gas spot price is projected to increase from just over $2.00 per million British thermal units (MMBtu) in November to an average of $3.00/MMBtu for the remainder of the heating season.
The EIA projects that global oil production will increase by 1.6 million barrels per day (b/d) in 2025, with nearly 90% of this growth coming from non-OPEC countries. This is due to OPEC+ delaying planned production increases until April 2025, a decision made during its December 5 meeting. Meanwhile, oil prices are expected to remain relatively stable, with the Brent crude oil spot price averaging $74 per barrel throughout the year as global oil markets maintain a balanced supply-demand dynamic.
In the United States, crude oil net imports are projected to decline significantly in 2025, falling by over 20% to 1.9 million b/d, the lowest level since 1971. This decline is attributed to increasing domestic crude oil production offsetting reduced refinery processing. On the natural gas front, inventories are forecast to remain above the five-year average through the winter heating season, with an expected total of 1,920 billion cubic feet (Bcf) in storage by the end of March 2025. The Henry Hub spot price is anticipated to rise from just over $2.00 per million British thermal units (MMBtu) in November to an average of $3.00/MMBtu for the remainder of the winter.
The EIA forecasts a 2% increase in U.S. electricity consumption this winter compared to last, driven by a 3% rise in residential demand due to colder weather. While the winter heating season began with mild temperatures in November, overall conditions are expected to be 6% colder than last winter, resulting in increased energy use across the country.
