Notable Forecast Changes

• We forecast Brent crude oil prices will average $81 per barrel (b) during the fourth quarter of 2021 (4Q21) and $78/b during 1Q22, both of which are $10/b higher than our previous forecast. The higher forecast reflects much tighter oil markets during this period than we previously expected. We now expect that global oil inventories in 4Q21 and 1Q22 will decline at an average rate of 0.5 million barrels per day (b/d), compared with a forecast of mostly unchanged inventories during that period in last month’s STEO.

• We expect crude oil production in the Federal Offshore Gulf of Mexico will average 1.5 million b/d in 4Q21, more than 0.2 million b/d lower than forecast last month. The lower forecast is mostly the result of Shell’s announcement that platforms damaged by Hurricane Ida would remain offline through the end of the year.

• We forecast Henry Hub spot prices will average $5.80 per million British thermal units (MMBtu) in 4Q21, an increase of $1.80/MMBtu from last month’s STEO. In this outlook, we expect prices to remain elevated through the first quarter of 2022. Forecast Henry Hub prices for 2022 average $4.01/MMBtu, up 54 cents/MMBtu from last month’s STEO.

• In mid-September, Exelon announced that it will continue operating its nuclear reactors at the Byron and Dresden power plants in Illinois. These nuclear plants were previously scheduled to be retired next year. As a result of this decision, we raised our forecast for U.S. nuclear generation in 2022 by 4% above the level forecast in last month’s STEO.