Forecast overview

• Global oil markets. Global oil markets will remain relatively tight through the middle of 2025 before gradually shifting to oil inventory builds later this year. We expect global oil inventories will fall in the second quarter of 2025 (2Q25) in part due to decreasing crude oil production in Iran and Venezuela. As a result, the Brent crude oil spot price in our forecast rises from about $70 per barrel (b) to $75/b by 3Q25. However, we expect oil inventories will build and place downward pressure on crude oil prices in late-2025 and through 2026 when we expect OPEC+ unwinds production cuts and non-OPEC oil production grows. As a result, we forecast the Brent crude oil price will fall to an average of $68/b in 2026.

• Natural gas consumption and inventories. Cold weather during January and February led to more consumption of natural gas and large withdrawals of natural gas from inventories. We now expect natural gas inventories to fall below 1.7 trillion cubic feet at the end of March, which is 10% below the previous five-year average and 6% less natural gas in storage than we had expected last month. We also increased our forecast for overall electricity generation over the next two years. As a result, we now expect the electric power sector will use more than 36 billion cubic feet per day of natural gas on average in 2025 and 2026, 2% and 1% more, respectively, than last month. Overall, we expect natural gas in storage to be 4% lower in 2025 and 3% lower in 2026 compared with what we had forecast last month.

• Natural gas prices. Because we now expect more consumption of natural gas in 2025 and 2026 and less natural gas in storge, we have raised our forecast Henry Hub spot price. We expect the Henry Hub price will average around $4.20 per million British thermal units (MMBtu) in 2025, 11% more than last month’s forecast. We expect the annual average price in 2026 will be near $4.50/MMBtu, up 8% from last month.

• Electricity consumption. We expect total U.S. electricity sales will increase by 3% in 2025, led by strong growth in the residential and commercial sectors. Residential sector growth is mostly related to cold weather during January and February that increased the use of electricity for space heating. Commercial sector growth is being driven by the expansion of data centers.

• Electricity generation. With more electricity consumption in our forecast this month, we expect the U.S. electric power sector will generate 3% more electricity this year than it did in 2024, compared with forecast growth of 2% last month. We expect electricity generation will grow by another 1% next year. We expect most of the additional generation compared with last month’s forecast will be supplied by natural gas.

• Trade policy assumptions. The current landscape for U.S. trade policy continues to rapidly evolve. On February 1, President Donald J. Trump signed an Executive Order announcing the imposition of tariffs on imports from Canada, Mexico, and China. Subsequently, the implementation of tariffs for most imports from Mexico and Canada have been delayed until early April, so the effects of those potential tariffs are not reflected in this outlook. Our outlook does include a tariff on U.S. imports from China and also includes an assumption about China’s imposition in February of tariffs on U.S. energy products. The U.S. macroeconomic outlook we use in the STEO is based on S&P Global’s macroeconomic model, which this month assumed an increasing universal tariff that will reach 10% by the end of 2025 and an effective tariff rate of approximately 20% on U.S. imports from China. That model was released in mid-February and does not reflect current policy. We will continue to monitor and will update our outlooks as policies change.

You can find more information in the detailed table of forecast changes.