EIA Expects Oil and Natural Gas Prices to Rise

Crude oil and natural gas prices were flat during the first half of September, but the Energy Information Administration expects prices to rise by the end of this year.

Crude oil prices on the New York Mercantile Exchange dropped below $70 per barrel briefly but bounced back to $73 on Sept. 19.

“More oil will be taken out of inventories in the fourth quarter of 2024 that we previously expected because OPEC+ announced that they will delay production increases until December,” EIA stated in its Short-Term Energy Forecast.

“Although market concerns over economic and oil demand growth, particularly in China, have increased, causing oil prices to fall, OPEC+ production cuts mean less oil is being produced globally than is being consumed. We expect the Brent crude oil spot price to average $82 per barrel in the fourth quarter of 2024.”

“We forecast natural gas prices will remain relatively flat in the upcoming shoulder season during September and October before prices rise through the end of 2025,” EIA stated. “Price increases in 2025 reflect U.S. natural gas production that does not keep pace with growth in U.S. liquefied natural gas (LNG) exports. We expect the Henry Hub spot price will rise from less than $2.00 per million British thermal units (MMBtu) in August to around $3.10/MMBtu next year.”

Meanwhile, the oil and gas industry representatives were critical of the Biden administration’s moratorium on new liquefied natural gas (LNG) export permits.

Bloomberg reported that Chevron Corp. Chief Executive Officer Mike Wirth called on the administration to reverse the pause, labeling the policy as a failure that “elevates politics over progress.” The permitting halt, which went into effect earlier this year, will raise energy costs, threaten supplies for America’s European allies and increase emissions by slowing the transition from coal to gas, Wirth said in a speech at the GasTech conference in Houston Sept. 17.

“When it comes to advancing economic prosperity, energy security, and environmental protection, an LNG permitting pause fails on all three,” he said. “The administration should stop the attacks on natural gas and embrace the benefits it’s already delivering around the world.”

The White House in January halted new licenses to export LNG, citing the need to more heavily scrutinize how the shipments affect the environment and national security. The ruling sent shockwaves through the industry, threatening to end a construction boom in terminals along the Gulf Coast that turned the U.S. into the world’s biggest exporter of the super-chilled fuel.

 Alex Mills is the former President of the Texas Alliance of Energy Producers.