EIA Projects Shifts in Oil, Gas, and Economic Trends in March Energy Outlook

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EIA predicts a significant decrease in natural gas prices for 2024, anticipating an average of $2.25 per million British thermal units (MMBtu).

This marks a notable 10 percent decline from 2023 and a staggering 65 percent drop from 2022. EIA’s March Short-Term Energy Outlook (STEO) attributes this decrease to expectations of high natural gas inventories, which are projected to be over 30 percent above average at the conclusion of the winter season due to lower-than-usual demand.

While the forecast indicates a slight reduction in domestic natural gas production compared to the record-high production of the previous year, EIA Administrator Joe DeCarolis emphasizes that the decline will be gradual.

Joe DeCarolis notes that although some producers have announced production curtailments or reduced spending on natural gas-related activities, the interconnectedness of natural gas production with crude oil production will temper the decrease in output.

The EIA’s outlook also anticipates continued growth in U.S. crude oil production throughout 2024 and 2025, surpassing the record levels set in 2023. This growth is expected to counterbalance the impact of ongoing voluntary production cuts announced by OPEC+ nations. However, DeCarolis underscores the presence of uncertainties, particularly regarding the potential effects of the Red Sea conflict on oil production and the adherence of OPEC+ members to their announced cuts.

Key highlights from the March STEO include projections of all-time highs in driving activity across the United States for 2024 and 2025. Despite increased driving, improvements in vehicle efficiency are anticipated to mitigate gasoline consumption. Meanwhile, the EIA forecasts U.S. gasoline prices to average around $3.50 per gallon in 2024, slightly lower than the previous year, primarily due to revisions reflecting higher crude oil price projections.

On the renewable energy front, the EIA expects a notable increase in utility-scale solar generation, accounting for 6 percent of U.S. electricity generation in 2024 compared to 4 percent in 2023. This growth is supported by a substantial 36-gigawatt expansion in solar generating capacity. Conversely, the EIA forecasts a slight uptick of 1 percent in U.S. coal exports for 2024 and a further 5 percent increase in 2025, even as coal consumption by the U.S. electric power sector continues to decline.


In its March Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) provides a comprehensive analysis of various energy sectors and economic indicators, revealing significant adjustments in forecasts for the coming year.

Global Oil Markets: With OPEC+ extending crude oil production cuts, the EIA revises its projections for global oil production growth in 2024 downward. Consequently, the forecast anticipates substantial declines in global oil inventories by the second quarter of 2024. This adjustment prompts an increase in the expected Brent crude oil spot price to an average of $88 per barrel (b) in 2Q24, up $4/b from the previous February STEO. The average Brent price for the year is forecasted to be $87/b.

U.S. Retail Gasoline Prices: The EIA forecasts an average U.S. retail gasoline price of approximately $3.50 per gallon (gal) in 2024, nearly 20 cents/gal higher compared to the February STEO. This increase is attributed to the rise in crude oil prices. Although projected to be lower than the previous year overall, nominal gasoline prices from May to July are expected to surpass those of the same period in 2023.

Natural Gas Prices: As the winter heating season concludes with natural gas inventories substantially above the five-year average, the EIA expects the Henry Hub spot price to remain below $2.00 per million British thermal units (MMBtu) in 2Q24. February saw the spot price average at a record low of $1.72/MMBtu, a 30 percent decrease compared to the previous STEO. Reduced natural gas consumption in the residential and commercial sectors during the winter played a role in driving these low prices.

Natural Gas Production: Although U.S. dry natural gas production is forecasted to remain unchanged in March compared to February, the EIA expects slight declines for the remainder of the year due to lower prices. The forecasted average production for 2024 is 103 billion cubic feet per day (Bcf/d), slightly lower than 2023. However, production is anticipated to increase to 104 Bcf/d in 2025, driven by growth in associated natural gas production in the Permian Basin and LNG export demand.

Electricity Generation: The EIA projects utility-scale solar generation to provide 6 percent of U.S. electricity generation in 2024, up from 4 percent in 2023, supported by a significant increase in solar generating capacity. Conversely, coal’s share in electricity generation is expected to decrease to 15 percent in 2024 from 17 percent in 2023.

Macroeconomics: Following updates to the S&P Global macroeconomic model and the release of the Bureau of Economic Analysis’s end-of-2023 advance estimate of GDP, the EIA revises its forecast for U.S. GDP growth. The new projections indicate growth rates of 2.6 percent in 2024 and 1.7 percent in 2025, representing upward revisions from the February STEO.

Baburajan Kizhakedath

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