US EIA lifts 2025 spot gas price forecasts on cold weather, below-average storage stocks

The US Energy Information Administration boosted its 2025 estimates for spot natural gas prices Feb. 11, pointing to higher demand this winter heating season and storage stocks that are projected to remain below average through the end of 2025.

"Cold weather at the end of January increased demand for space heating and contributed to a 12% increase in US natural gas consumption over the previous five-year average for the month," the agency said in a release that accompanied its February Short-Term Energy Outlook.

The agency now forecasts that Henry Hub natural gas prices will average $3.79/MMBtu for full-year 2025, up about 20% from the EIA's January estimate, before averaging $4.16/MMBtu in 2026, according to the outlook.

In the near term, EIA lifted its first-quarter 2025 Henry Hub natural gas spot price forecast 49 cents to $3.70/MMBtu. The Q2 forecast rose 80 cents from the previous month's estimates to $3.39/MMBtu.

Pointing to the mid-January cold spell that affected much of the country, the agency estimated that residential and commercial gas use averaged 50.6 Bcf/d in January, 13% above the five-year average, while power sector gas use was also 20% above the average at 37.6 Bcf/d.

Elevated consumption, combined with lower gas production than in December, helped drive storage pulls in January to nearly 1 Tcf, or 39% above the five-year average, the EIA said.

"Because of increased consumption and relatively flat production in the remainder of the first quarter of 2025, we expect natural gas inventories at the end of the withdrawal season on March 31 to be 4% below the five-year average," the report said.

Reflecting cold weather demand, the EIA raised its forecast for natural gas consumption by 2.3 Bcf/d to 108.8 Bcf/d for Q1. It lowered its estimate by 1.4 Bcf/d to 77.2 Bcf/d for Q2.

On the production side, the EIA raised its natural gas marketed production estimate for Q1 by 600 MMcf/d to 113.6 Bcf/d, while the Q2 production forecast fell by 400 MMcf/d to 114.1 Bcf/d. The agency expects total marketed production to average 114.7 Bcf/d in 2025 and 117.9 Bcf/d in 2026, up 200 MMcf/d and 300 MMcf/d, respectively, from the January outlook.

The weather and the timing of new LNG production starts remain risks to the price forecast, the EIA said, but the agency predicted that China's imposition of tariffs will have a "limited effect on US LNG exports."

"With ample demand for LNG globally, we expect that any LNG not purchased by China would be imported elsewhere," the EIA said.

Power generation, consumption

The EIA anticipates that increased power generation from renewable energy sources will be the main contributor to the growth in overall US generation, which is expected to climb 2% in 2025 and another 1% in 2026.

A large part of this growth will be driven by utility-scale solar generation, which is forecast to grow to 7% of total US generation in 2025 and 8% in 2026 after accounting for 5% in 2024. The jump in market share for solar is the result of an anticipated 45% increase in the amount of nationwide solar generating capacity between 2024 and 2026. The EIA forecasts that wind generation will account for 11% of total US generation in 2025, flat with 2024, before rising to 12% in 2026.

As renewables increase, fossil fuel-fired generation is poised to head in the opposite direction. The EIA forecasts that gas-fired generation, currently the largest source of power in the country, will drop from 43% last year to 40% in 2025 and then to 39% in 2026. Coal, which accounted for 16% of all generation in 2024, is expected to stay flat this year before falling to 15% in 2026. The EIA attributes most of the expected reduction in gas-fired generation to anticipated gas-price increases.

Overall US electricity consumption is expected to rise to 4.179 trillion kWh in 2025, up a little more than 2% from 2024, and to 4.239 trillion kWh in 2026, representing another 1% climb.

"Growing US demand for electricity is spurring more generation," the EIA said.

Should the forecast for US power generation growth hold in 2025 and 2026, it would mark the first time since 2005-07 that the country has experienced three consecutive years of generation growth.