Key Highlights
- Global oil inventories are expected to grow more than 2 million b/d in late 2025, leading to lower crude prices.
- OPEC+ and non-OPEC producers are likely to cut production in response to falling prices, moderating inventory growth.
- US gasoline prices are forecasted to decrease by about 6% in 2026, averaging less than $2.90/gal.
- US distillate inventories are projected to hit lowest levels since 2000, driven by higher exports and demand.
- Natural gas prices are set to increase due to stable production and rising LNG exports, reaching over $4.30/MMbtu in 2026.
Story Julia Fanzeres (Bloomberg) — US oil output is now expected to fall in 2026 as prices slide, according to a government forecast, halting years of growth that turned the country into the world’s top producer.
US crude output is now expected to shrink to 13.28 million barrels a day in 2026, according to the Energy Information Administration’s Short-Term Energy Outlook released Tuesday. The agency’s previous projection in July was for 13.37 million barrels a day, and the country is on track for the first annual drop in production since 2021.
Lower production would deal a blow to US President Donald Trump’s push for American energy dominance. Trump declared an energy emergency early in his second term in a bid to boost domestic supply.
Yet shale companies and the US agency have warned that falling oil prices heading into 2026 will decrease the appetite for drilling, with current drilling rigs in the US hovering around four-year lows.
Still, increased efficiency from existing wells is expected to boost production by 1.5% to an all-time high of about 13.41 million barrels a day this year.
Higher US output, alongside increases from Saudi Arabia and its allies, is set to contribute to global inventory builds of more than 2 million barrels a day in the fourth quarter of 2025 and the first quarter of next year, according to the EIA. That’s about 800,000 barrels a day higher than the agency’s estimate last month.
The EIA also increased forecasts for a global supply surplus in 2025 to about 1.7 million barrels a day, up from a previously estimated 1.1 million barrel. For next year, the agency expects a surplus of around 1.5 million barrels a day, compared to its previous estimate of 1.1 million barrels a day.
That brings US estimates more into line with the International Energy Agency, which projects a glut of 2 million barrels a day in 2026. The IEA will release its latest report on Wednesday.
Lower oil prices present a challenge for shale companies but are a relief for consumers. The US is now predicting Brent crude prices will drop to $50 a barrel in early 2026, is down about $15 a barrel from where crude futures are currently trading. Brent has dropped 11% this year.
The average national retail gasoline price is now estimated to be $2.90 a gallon next year, according to the EIA’s report. That would be lowest cost since the spring of 2021, according to AAA data.
