The U.S. Energy Information Administration (EIA) has revised its energy price forecasts following a colder-than-expected end to February. This updated outlook includes higher projections for U.S. natural gas prices in 2025 and adjusted expectations for Brent crude oil prices, which are now forecast to decline later that year. The report reflects the ongoing impact of changing weather patterns, supply constraints, and global energy production shifts.

Colder-than-expected weather during January and February significantly increased natural gas consumption, which in turn caused substantial withdrawals from inventories. The EIA now anticipates natural gas inventories to dip below 1.7 trillion cubic feet by the end of March. This projected inventory level is approximately 10% below the previous five-year average and 6% lower than the forecast issued last month. These declines highlight how winter weather patterns can rapidly deplete stored supplies, adding pressure to future energy prices. Increased demand from residential and commercial heating contributed heavily to these inventory reductions. As colder weather persisted, utilities tapped deeper into their reserves to meet consumer needs. The EIA expects this trend to continue influencing prices in the months ahead as utilities work to replenish depleted stocks.

In response to higher consumption and lower inventory levels, the EIA forecasts a continued rise in natural gas prices through 2026. The Henry Hub spot price is now projected to average approximately $4.20 per million British thermal units (MMBtu) in 2025, marking an 11% increase compared to last month’s forecast. Looking further ahead, the EIA expects prices to average around $4.50/MMBtu in 2026, reflecting an 8% increase from the previous projection. These adjustments signal concerns about maintaining sufficient supply amid volatile demand patterns.

The EIA predicts Brent crude oil prices will increase from their current $70 per barrel to roughly $75 per barrel by the third quarter of 2025. However, the EIA anticipates that oil inventories will begin to build later in 2025, which is expected to drive prices downward through 2026. This price decline reflects projections that OPEC+ will gradually unwind production cuts while non-OPEC oil production continues to expand, adding supply to global markets.

The EIA has also forecasted a 3% increase in total U.S. electricity sales in 2025, reflecting greater energy consumption. This growth is expected to be driven primarily by increased demand in the residential and commercial sectors. Colder winter conditions earlier in the year boosted heating needs in residential areas, while commercial-sector demand is being spurred by the rapid expansion of data centers, which require substantial energy resources to operate efficiently. Data centers are playing an increasingly important role in energy consumption, reflecting the digital economy's growing infrastructure demands.

Overall, the EIA's updated forecast underscores the impact of weather patterns, shifting inventory levels, and global oil production trends on U.S. energy markets. As demand fluctuates and production levels evolve, energy prices are expected to remain dynamic, posing challenges for consumers and industries alike.