The U.S. Energy Information Administration (EIA) anticipates a 40 percent increase in natural gas prices for the remainder of the winter heating season compared to November spot prices.
This rise comes despite projections that U.S. natural gas inventories will remain 2 percent above the five-year average at winter’s end, following a season start with 6 percent more in storage than average.
“Recent natural gas prices have been historically low, so a colder winter than last will draw on storage and raise prices to some extent,” EIA Administrator Joe DeCarolis said in the report.
He highlighted that prices will stay below the peaks of 2021 and 2022. The U.S. Henry Hub natural gas spot price is forecast to rise from just over $2.00 per million British thermal units (MMBtu) in November to an average of $3.00/MMBtu for the rest of the winter.
Highlights from December STEO Report:
Oil Production: OPEC+ production cuts announced on December 5 are expected to reduce global oil inventories by 700,000 barrels per day in Q1 2025. Supply growth outside OPEC+ is forecast to reverse this trend later, leading to a 100,000-barrel-per-day increase in global inventories by year-end.
Oil Prices: Brent crude oil prices are projected to average $74 per barrel in Q1 2025, decreasing to $72 per barrel in Q4 as inventory builds exert downward pressure.
Global Oil Production: Non-OPEC countries will drive most of the anticipated 1.6 million barrels per day increase in 2025 global oil production, accounting for nearly 90 percent of the growth. OPEC+ will delay production increases until April 2025.
U.S. Oil Imports: Net imports of crude oil are expected to drop by more than 20 percent, reaching a historic low of 1.9 million barrels per day in 2025.
Natural Gas Storage: Inventories are projected to remain above the five-year average through March 2025, ending the winter season at 1,920 billion cubic feet (Bcf), 2 percent higher than the average.
Electricity Demand: Colder weather is expected to drive a 2 percent increase in U.S. electricity sales compared to last winter, with residential consumption rising by 3 percent.
Emissions
Though EIA expects CO2 emissions in 2025 to about the same as they were in 2024, its forecast for 2025 CO2 emissions is 2 percent (or around 100 million metric tons) higher than it was in forecast in its January 2024 outlook.
The EIA outlook for more emissions in 2025 is mostly associated with an upward revision in coal-fired electricity generation. Compared with the January forecast, EIA expects more coal generation in 2025 due to an upward revision in overall electricity demand associated with rising electricity consumption from data centers.
Increased petroleum product consumption, mostly motor gasoline, also increased the 2025 emissions estimates, EIA said.
Baburajan Kizhakedath