Gib Knight, Industry Correspondent | The U.S. Energy Information Administration (EIA) has released its November Short-Term Energy Outlook (STEO), delivering a sobering forecast for crude oil producers and a bullish signal for the natural gas sector. The data, finalized on November 6 and published on November 12, paints a picture of stagnating domestic oil production growth and a significant price correction in global crude markets next year, contrasted with sharply rising Henry Hub prices fueled by unprecedented liquefied natural gas (LNG) export capacity. Oil and gas professionals and mineral owners must now recalibrate drilling schedules and capital expenditure plans to account for a lower-price crude environment and intensifying demand for natural gas.
The EIA now projects that U.S. crude oil production, including lease condensate, will average 13.6 million barrels per day (mb/d) in both 2025 and 2026, marking a dramatic slowdown in the growth trajectory that saw output climb from 13.2 mb/d in 2024. While the 2025 and 2026 forecasts represent a slight upward revision compared to the EIA’s October outlook, the near-flat annualized growth rate suggests that the capital-constrained, output-at-all-costs drilling approach of prior cycles has faded, potentially confirming industry concerns about well productivity declines and limited inventory depth in the most productive basins.
Crude Production Stagnates as Prices Tumble
The most significant takeaway for operators and mineral royalty owners alike is the EIA’s bearish view on crude pricing for the coming year. The STEO forecasts the Brent crude oil price to average $55 per barrel (b) for all of 2026, a substantial drop from the projected $69/b average for 2025. This downward pressure is expected to begin in the first quarter of 2026, with the EIA predicting prices will dip to approximately $54/b.
The primary driver of this price decline is the anticipated build-up in global oil inventories. The EIA expects commercial inventories worldwide to continue rising through 2026, mitigating geopolitical risks and dampening the ability of major oil producers to command higher prices. While the $55/b forecast is $3/b higher than the projection from the October STEO—a revision attributed to updated assumptions regarding inventory builds in China and the lingering impact of sanctions on Russian exports—it remains a challenging price point for many high-cost U.S. producers.
Analyzing the domestic production details, the plateauing annual output figure masks crucial underlying shifts. Quarterly production is expected to peak at 13.82 mb/d in Q4 2025 before gradually declining throughout 2026. Furthermore, the growth contribution from the Lower 48 states, excluding the Gulf of Mexico (GOM), is showing signs of moderation. For 2026, the GOM is expected to contribute a robust 1.97 mb/d, up from 1.91 mb/d in 2025, suggesting that a growing portion of U.S. supply expansion is being driven by long-cycle offshore projects rather than the rapid, short-cycle responsiveness of onshore shale. For mineral owners, the plateau in national output means that incremental royalty increases will become harder to achieve outside of targeted, high-productivity sweet spots.
LNG Export Engines Drive Natural Gas Expansion
In stark contrast to the moderate outlook for crude, the STEO provides strong data points supporting the expansion of the U.S. natural gas market. Henry Hub spot prices are projected to average $4.00 per million British thermal units (MMBtu) in 2026, a significant 16 percent increase over the $3.50/MMBtu forecast for 2025.
This price escalation is almost entirely underpinned by the rapidly expanding global market for American gas. The EIA expects U.S. LNG exports to grow by an additional 10 percent in 2026, reaching 16 billion cubic feet per day (bcf/d). This export push is being accelerated by facilities like the Plaquemines LNG project, which has ramped up its operational capacity faster than initially anticipated, prompting the EIA to raise its Q4 2025 export forecast. For Appalachia and Permian basin gas producers, this sustained increase in demand for feed gas provides a crucial price floor, insulating them from purely domestic consumption variables.
Compounding the export demand is a striking forecast for domestic electricity consumption. The EIA projects electricity sales to end-use customers across the U.S. will rise by 2.6 percent in 2026. The engine of this growth is localized and region-specific, led by the West South Central region, which encompasses major energy hubs like Texas. This demand spike is attributed directly to the proliferation of large-scale data centers and cryptocurrency mining facilities requiring a massive, constant power supply. This structural shift in electricity consumption creates a new, non-traditional domestic load center for natural gas, which remains the dominant fuel source for generation, accounting for 40 percent of the U.S. electricity mix in the forecast period.
The November STEO underscores a deepening dichotomy within the U.S. energy landscape. The crude oil sector is entering a phase defined by price volatility and subdued growth expectations, forcing a renewed emphasis on cost control and capital efficiency. Meanwhile, the natural gas sector, driven by geopolitical demand for LNG and emerging domestic power loads from digital infrastructure, is poised for robust expansion and higher average pricing. For producers and investors, the message is clear: the future strength of the American energy industry rests increasingly on its ability to leverage its abundant natural gas reserves to meet global and emerging domestic electricity demands.
