By Anthony Harrup

U.S. natural gas prices this year are likely to be higher than previously estimated as cold weather at the end of January boosted demand for heating fuel and led to bigger-than-average withdrawals from storage, the U.S. Energy Information Administration said Tuesday.

In its latest Short Term Energy Outlook, the EIA predicts that Henry Hub spot prices for natural gas will average $3.80 per million British thermal units in 2025, up from its earlier forecast of about $3.10. For 2026 it predicts average prices of $4.20/mmBtu.

Aside from the typical winter-weather risks to the price estimates, an additional risk includes the timing of new liquefied natural gas production planned over the next two years, the EIA said. The agency sees China's 15% retaliatory import tariff on U.S. LNG having little impact on exports, "as we expect that any LNG not purchased by China would be imported elsewhere."

Natural gas inventory withdrawals in January were close to a trillion cubic feet, or 39% more than the five-year average for the month, including a drawdown of 321 billion cubic feet in the week ended Jan. 24, which was the fourth-largest on record, the EIA noted.

"Because of increased consumption and relatively flat production in the remainder of the first quarter of 2025, we expect natural gas inventories at the end of the withdrawal season on March 31 to be 4% below the five-year average," the EIA said.

The EIA's crude oil price estimates were little changed from those of the previous report, with international benchmark Brent forecast to average $74 this year and to fall to $66 a barrel in 2026. West Texas Intermediate crude is forecast to average $71 a barrel this year and $62 a barrel in 2026.

The EIA said it doesn't expect U.S. sanctions on Russian oil shipments to much affect its global oil-production estimate of 104.6 million barrels a day. "Although the latest sanctions on Russia will slightly reduce Russia's oil production compared with what we forecast last month, they will mostly result in shifts in global oil trade flows," the agency said.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

February 11, 2025 13:21 ET (18:21 GMT)

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