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Short-Term Energy Outlook

Release Date: Mar. 11, 2025  |  Forecast Completed: Mar. 6, 2025  |  Next Release Date: Apr. 8, 2025  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Petroleum products

Distillate inventories and net trade
A decrease in U.S. refining capacity and an increase in U.S. distillate fuel consumption contribute to low distillate fuel inventories in our forecast. We forecast end-of-month total distillate stocks—which include petroleum-based distillate, renewable diesel, and biodiesel—will be 8% lower on average in 2025 compared with last year and will decline another 4% in 2026. Closures of two U.S. refineries in 2025 are likely to decrease the production of refined products over the next two years. At the same time, we expect U.S. distillate consumption will increase because of increasing industrial activity and growing imports of goods into the United States related to a strengthening U.S. dollar, which support demand for diesel fuel for on-highway trucking.

Declining distillate production and rising consumption make it likely suppliers will draw on distillate stocks and reduce U.S. distillate exports to balance the domestic market. If our forecast is realized, average end-of-month total distillate stocks in 2026 would be at their lowest since 2000. Lower stocks would contribute to tighter market conditions, especially during higher demand periods such as the fall harvest season and winter heating season, which could lead to higher prices for distillate. We expect refining margins for distillate fuel to rise from 52 cents per gallon (gal) last year to almost 60 cents/gal this year and nearly 80 cents/gal in 2026. However, declining crude oil prices could mitigate the effect of higher margins on retail prices. We expect retail diesel prices to average about $3.60/gal in 2025 and slightly more than $3.70/gal next year, both of which are down from 2024.

U.S. total distillate inventories

We forecast U.S. distillate net exports (exports minus imports) to decline in 2025 and 2026, mostly due to lower U.S. distillate exports. In 2024, the United States exported the most distillate fuel since 2019 because of relatively low distillate consumption in the United States and relatively strong demand overseas. We expect this trend to reverse in 2025 as increasing domestic distillate consumption and declining production pull product away from exports.

U.S. net exports of distillate

Hydrocarbon gas liquids trade
U.S. hydrocarbon gas liquid (HGL) net exports in our forecast reach 3.0 million barrels per day (b/d) for the first time in 2025, a 10% increase from 2024. We forecast a further 7% increase in 2026 to 3.2 million b/d. Global demand for HGLs, which include ethane, propane, butanes, and natural gasoline, has grown rapidly in the last decade because of higher demand for HGLs as a petrochemical feedstock, among other uses in the residential and commercial sectors. More U.S. natural gas production in liquids-rich regions such as the Eagle Ford in Texas or the Marcellus and Utica in the Northeast has led to more growth in HGL production and net exports. By 2026, we expect U.S. HGL production will increase by 0.5 million b/d more than in 2024, while domestic consumption of HGLs will be almost flat over the same period.

U.S. hydrocarbon gas liquids net exports

We expect increased ethane exports because additional petrochemical projects mainly in Europe and Asia that use ethane as a feedstock are scheduled to come online by the end of 2026. Propane and butane exports have been growing annually for nearly 20 years, and we expect exports of these fuels to continue growing through 2025 and 2026 because of higher production and lower domestic prices relative to international benchmark prices, incentivizing demand for U.S. propane and butane in Asia. Demand for propane as a petrochemical to produce propylene and ethylene (base chemicals for plastics and other end-uses) has been growing in East Asia, especially China. Recent retaliatory tariffs in China do not include propane, so U.S. exports to China are expected to remain elevated.

Petroleum Products
  2023202420252026
Note: Values in this table are rounded and may not match values in other tables in this report.
WTI spot average
(dollars per barrel)
78777165
U.S. crude oil production
(million barrels per day)
12.913.213.613.8
U.S. liquid fuels consumption
(million barrels per day)
20.320.320.520.6
U.S. crude oil & petroleum product net imports
(million barrels per day)
-1.7-2.3-2.8-3.2
Retail gasoline price
(dollars per gallon)
3.503.303.203.20
Retail diesel fuel price
(dollars per gallon)
4.203.803.603.70

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