Energy News: Feb 19, 2025 EIA’s Latest Short-Term Energy Outlook (STEO) Forecasts Natural Gas will Increase 73% in 2025 and
Energy News: Feb 19, 2025
In our reports earlier this year we pointed out demand is expected to outpace supplies for an extended period, which will support higher prices similar to what has taken place since 2000 when prices were as low as 2024, the average price was always higher long-term:
In our Feb 3rd Energy Update, we said our premise demand was expected to outpace supply. This was confirmed by the EIA’s latest weekly storage report, which revealed supplies had declined from nearly 700 Bcf above the 5-year moving average at the end of last year’s winter heating season to 111 Bcf below the 5-year average by the end of January.
In our report, we said we believe the massive decline of 800 Bcf over the last 10 months will likely continue due to surging domestic electricity demand to accommodate the explosion of data centers, electric vehicles needing to be connected to the grid, and exports expected to rise for the foreseeable future.
CelsiusEnergy.net is a data-driven website that provides live supply/demand data and daily projections for the next 4 EIA Natural Gas Inventory Reports. I have used this website over the years to help me estimate near-term supplies.
And today’s daily report confirmed our belief the deficit will continue to grow with supplies estimated to decline an additional 286 Bcf below the 5-year average over the next 4 weeks, resulting in total supplies decreasing from 111 Bcf at the end of January to approach 400 Bcf below the 5yr average by March 7th.
The continued tightening of supplies is the primary reason the EIA’s latest Short-Term Energy Outlook (STEO) on Feb 11th estimated the average price of Natural Gas would increase from $2.20 per MMBtu in 2024 to $3.80 per MMBtu in 2025, an increase of 73% and an additional 11% in 2026 with the price averaging $4.20.
In their report, they concur with our belief exports will rise for the foreseeable future estimating exports of Liquefied Natural Gas (LNG) will increase from 12 Bch per day in 2024 to 14 Bcf per day in 2025 and 16 Bcf per day in 2026.
An increase in LNG exports from 12 Bcf to 16 Bcf over the next 2 years, will increase exports by more than a trillion cubic feet from where they were in 2024, and since our total storage capacity is only 4 trillion cubic feet, increasing exports by more than 1 trillion cubic feet within 2 years will have a profound impact on prices long-term
For those desiring further analysis, our 2025 Winter Update includes a detailed explanation of why supply deficits are expected over the next few years, and why the risk of higher prices will continue to increase; therefore, we recommend anyone with agreements expiring within the next 18 months take advantage of short-term declines to reserve Natural Gas and Electricity to be available when their present agreements expire.
Not every client’s risk tolerance and hedging strategy are the same, the goal of our reports is to reveal your risk/reward opportunities. We invite you to call one of our energy analysts to help plan a hedging strategy appropriate for your situation.
Ray Franklin
Energy Professionals
Senior Commodity Analyst
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