The U.S. Energy Information Administration (EIA) released its February Short-Term Energy Outlook (STEO), which includes an upward revision of the 2025 forecast for Henry Hub natural gas spot prices.
This revision follows a cold end to January, which significantly impacted energy consumption patterns across the country. The colder-than-usual temperatures resulted in higher demand for space heating, leading to a 12 percent increase in U.S. natural gas consumption compared to the previous five-year average for January.
As a result of this increased consumption, there were above-average withdrawals from natural gas inventories, prompting the EIA to adjust its price forecast. The agency now expects the Henry Hub spot price to average $3.80 per million British thermal units (MMBtu) in 2025, which represents a 20 percent increase from its previous forecast.
In addition to natural gas, the EIA’s report highlights expectations for crude oil production and prices. The agency maintains its outlook for global oil production growth and a downward trend in crude oil prices through 2026. However, recent geopolitical developments, particularly the announcement of additional sanctions against Russia’s oil and shipping sectors, have introduced a new level of uncertainty. Despite these sanctions, the EIA does not anticipate a significant impact on global crude oil production or prices. Instead, the primary effect may be on trade flows, as market participants adjust to shifting supply dynamics.
The February STEO also provides insights into U.S. refinery operations, forecasting a decline in the production of refined petroleum products due to the planned closure of two major refineries. The LyondellBasell refinery in Houston began shutting down on January 27, while Phillips 66 has announced plans to close its Los Angeles refinery by the end of the year.
As a result, U.S. production of refined products is expected to decrease by approximately 190,000 barrels per day in 2025 and an additional 180,000 barrels per day in 2026. With these refinery closures, the EIA projects that by 2026, the U.S. will shift from being a net exporter to a net importer of gasoline and jet fuel, while still maintaining a net export position for distillate fuel oil.
The report also covers projections for residential electricity prices, predicting a modest 2 percent increase in retail electricity rates for the U.S. residential sector in 2025. This increase would be the smallest annual rise in electricity prices since 2020.
The relatively moderate price growth is attributed to stable natural gas prices over the past year, though ongoing investments in grid infrastructure continue to exert upward pressure on electricity costs. The expected price increase aligns closely with the anticipated rate of inflation growth, indicating a stable pricing environment for residential consumers.
Additionally, the EIA provides an updated forecast for U.S. coal exports, estimating that the country will export approximately 100 million short tons of coal in both 2025 and 2026. This figure represents a 2 percent reduction from the agency’s January forecast. One contributing factor to this adjustment is China’s imposition of tariffs on U.S. coal imports. While these tariffs are expected to reduce direct coal exports to China, the EIA anticipates that U.S. exporters will find alternative markets for their coal, thereby mitigating the overall impact on total export volumes.
Overall, the EIA’s February STEO presents a detailed assessment of key energy market trends, reflecting the influence of seasonal demand fluctuations, geopolitical developments, infrastructure changes, and broader market dynamics.
GreentechLead.com News Desk