The EIA’s February 2026 Short-Term Energy Outlook provides updated projections for key energy markets through 2026 and into 2027, focusing on oil, natural gas, electricity, coal, and related consumption patterns. The forecast reflects recent weather-related disruptions, evolving supply and demand fundamentals, and ongoing shifts in the energy mix.
Global crude oil prices experienced an early-year uptick, with Brent crude averaging around $67 per barrel in January 2026 — the highest level since late 2025 — driven by weather-related supply disruptions and geopolitical tensions. However, the EIA expects oil prices to decline over the forecast period as global oil production outpaces demand, leading to inventory builds that put downward pressure on prices. On an annual average basis, Brent crude is projected to fall to roughly $58 per barrel in 2026 and about $53 per barrel in 2027. This outlook assumes continued supply growth, particularly outside of OPEC+, even as uncertainty around exports from certain producing regions remains.
Natural gas markets have shown notable volatility early in 2026. Severe winter weather, represented by Winter Storm Fern, caused a sharp rise in heating demand and significant inventory withdrawals, leading to a surge in spot prices. The Henry Hub natural gas spot price averaged about $7.72 per million British thermal units (MMBtu) in January, roughly 80 percent higher than December levels. As a result, the EIA raised its short-term natural gas price forecasts for February and March to reflect tighter supply during the peak withdrawal season. Over the longer term, the agency expects prices to average around $4.30/MMBtu in 2026 and near $4.40/MMBtu in 2027, with drilling activity and production growth helping moderate price increases later in the forecast.
U.S. natural gas production dipped slightly early in the year due to cold-weather disruptions but is expected to rebound in February and grow modestly overall in 2026 as pipeline capacity expansions and producer responses to higher prices take effect.
In the electricity sector, higher demand is anticipated due to stronger economic activity and expansion of data centers, particularly in Texas and the mid-Atlantic. Solar generation is forecast to expand rapidly, with substantial percentage increases in both 2026 and 2027, while wind generation also grows steadily. Coal consumption by electric power plants was higher in January than previously forecast, driven by elevated natural gas prices, although overall coal use is still expected to decline relative to 2025.
The EIA also lowered its forecast for Mont Belvieu propane spot prices for 2026 and 2027, reflecting the expectation of increased propane production tied to higher natural gas output. Overall, the STEO anticipates continued adjustments in energy markets as production, weather, and demand patterns evolve.
Source: https://www.eia.gov/outlooks/steo/
