Forecast overview

• Global oil prices. Crude oil prices rose for a third consecutive month in October as falling global inventories, attacks on oil tankers in the Persian Gulf, constrained shipping capacity, and higher transportation costs tightened supply. Amid these conditions, we expect the Brent crude oil spot price will remain near $100 per barrel (b) for the remainder of this year. We assume most Middle East production outside Iran to return to pre-conflict averages by the middle of next year. As depleted global oil inventories build throughout next year, we forecast the Brent spot price will gradually fall to an average of $77/b in the fourth quarter of 2027.

• Crude oil inventories. U.S. commercial crude oil inventories fell to 410 million barrels at the end of October, the lowest end-of-October level since 2014. Inventories fell as a large spread between Brent and West Texas Intermediate (WTI) prices encouraged crude oil exports and lowered crude oil imports. Additionally, high crude oil inputs at U.S. refineries over the past several months have helped reduce inventories. Inventories remain below the five-year average through the middle of next year in our forecast as ongoing tightness in the global oil tanker market sustains a wide, albeit narrowing, Brent-WTI price spread. U.S. crude oil inventories gradually rise in the forecast, driven by higher net imports as the Brent–WTI spread narrows and U.S. crude oil production reaches a record 14.3 million barrels per day in 2027.

• U.S. petroleum prices. Although we expect the U.S. average retail price of gasoline and diesel to decline in 2027, we raised our forecast for those prices from last month’s outlook. In our forecast, the U.S. retail diesel price averages $5.03 per gallon (gal) next year, 12% higher than we forecast last month. Gasoline prices average $3.73/gal, 5% higher than last month. We now assume global petroleum product markets will face continued supply constraints through the end of 2027. These market conditions will support wider petroleum product crack spreads next year and incentivize elevated U.S. refinery operations.

• Natural gas prices. A warm start to November is putting downward pressure on U.S. natural gas prices. We expect more natural gas in storage in the coming months than we had previously forecast because mild weather in November reduced heating demand. We forecast the Henry Hub spot price for natural gas to average $2.87 per million British thermal units from November through March, 16% lower than we expected last month.

• LNG exports. International natural gas prices have climbed to their highest levels since December 2022 while U.S. Henry Hub prices have fallen, supporting U.S. liquefied natural gas (LNG) exports, with export terminals running near full capacity. We forecast U.S. LNG exports will rise to 19 billion cubic feet per day in 2027, up 26% from 2025, as new export capacity ramps up and existing facilities expand.

• Electricity generation. We expect the U.S. electric power sector to generate almost 4,390 billion kilowatthours in 2026, up 2.7% from 2025, driven by rising demand from the commercial sector and increased cooling needs from warmer-than-average summer temperatures. We expect electricity generation growth will slow to 1.2% in 2027, with forecast milder weather reducing residential demand. Most of the generation growth over the forecast period comes from utility-scale solar plants.

• Coal markets. U.S. coal consumption falls by 7% to 419 million short tons in 2026 in the forecast, and by another 5% in 2027. Coal production decreases by just 2% this year, as rising exports partly offset the drop in consumption. Production falls by another 4% in 2027 as consumption decreases and exports remain flat. Even with flat exports, exports make up a rising share of U.S. coal disposition in the forecast, supported by stronger demand from Europe and Asia as well as China’s commitment to purchase 10 million metric tons of U.S. coal in both 2027 and 2028.

• Forecast timeline. We finalized inputs into the model on November 5, 2026. This month’s forecast does not specifically account for market events after that day.

You can find more information in the detailed table of forecast changes.