ENB Pub Note: Yesterday, we examined Cap Ex budgets, and today, we are investigating production, demand estimates, and storage. The current storage levels are low and are listed below. Here is a lot of data to chew on. Go ahead and skip to the summary if you want to know what price I think we will see oil hold to after the market figures out the Trump Tariff wars.
Oil and Gas Storage
Current Oil and Gas Storage Levels in the United States (as of April 25, 2025)
Crude Oil Storage Levels
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Total U.S. Crude Oil Stocks:
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As of the week ending April 25, 2025, U.S. crude oil inventories were 457.7 million barrels, a decrease of 2.7 million barrels from the previous week’s 460.4 million barrels.
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This is 2% below the five-year average for that time of year, indicating tighter-than-average storage levels.
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Cushing, Oklahoma (Key Storage Hub):
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Inventories at Cushing increased by 682,000 barrels to approximately 34.3 million barrels, compared to a decrease of 86,000 barrels the prior week.
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Strategic Petroleum Reserve (SPR):
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As of March 2025, the SPR held approximately 389.1 million barrels of crude oil, based on the Department of Energy’s data and recent trends. This is significantly lower than its peak of 726.6 million barrels in 2009 but provides about 1,206 days of import protection based on 2021 net import levels.
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Context:
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The decrease in commercial crude oil stocks reflects stronger refining activity and export demand, despite a projected global inventory build starting in mid-2025 due to OPEC+ production increases and slower demand growth.
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The SPR’s low levels stem from sales in 2022–2023 to stabilize markets, with limited replenishment due to budget constraints and policy shifts.
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Natural Gas Storage Levels
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Total U.S. Working Gas in Storage:
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As of April 25, 2025, working natural gas stocks were 2,041 billion cubic feet (Bcf), up 107 Bcf from the previous week’s 1,934 Bcf.
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This is:
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0.25% above the five-year (2020–2024) average of 2,036 Bcf.
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17.57% below last year’s level of 2,476 Bcf for the same week.
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Context:
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The larger-than-average injection (107 Bcf vs. a five-year average of 58 Bcf) reflects milder weather reducing demand and increased production.
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Despite the recent build, storage remains below 2024 levels due to high withdrawals during the 2024–2025 winter (January–February cold snaps) and robust LNG export demand.
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The EIA projects natural gas prices to rise to $4.30 per million British thermal units (MMBtu) in 2025, partly due to storage dynamics and export growth.
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Other Petroleum Products
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Gasoline Inventories:
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Decreased by 4.003 million barrels to approximately 224.3 million barrels, compared to a forecast of -1.427 million barrels and a prior week’s drop of 4.476 million barrels.
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Gasoline stocks are about 4% below the five-year average, driven by strong summer driving demand and refinery maintenance.
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Distillate Inventories (e.g., Diesel, Heating Oil):
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Decreased by 1.64 million barrels (specific total not provided in recent data but estimated at ~120 million barrels).
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Distillate stocks are projected to be 8% lower on average in 2025 compared to 2024, due to reduced refinery capacity and higher industrial demand.
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Context:
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Tight distillate and gasoline inventories are contributing to higher refining margins, with distillate margins expected to rise to 60 cents per gallon in 2025.
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U.S. distillate net exports are forecasted to decline in 2025 as domestic consumption grows.
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Critical Perspective
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Oil Storage: U.S. crude oil inventories are relatively tight compared to historical averages, supporting higher prices domestically despite global projections of inventory builds in 2025 (0.6–0.7 million bpd globally in Q2–Q4). The SPR’s low levels reduce emergency buffers, increasing vulnerability to supply shocks, especially with sanctions on Russia, Iran, and Venezuela adding volatility.
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Natural Gas Storage: While slightly above the five-year average, gas storage is significantly below last year’s levels, reflecting robust export demand (LNG exports hit 14.5 Bcf/day in 2023) and weather-driven withdrawals. The EIA’s price forecast seems optimistic given global LNG competition and potential oversupply if European storage remains high.
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Data Reliability: EIA reports are comprehensive but can lag real-time market shifts. X posts provide timely sentiment (e.g., inventory draws exceeding forecasts) but lack verification. Always cross-check with primary sources like the EIA’s Weekly Petroleum Status Report or Natural Gas Storage Dashboard.
Notes
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Data is sourced from the EIA’s Weekly Petroleum Status Report (April 30, 2025, for week ending April 25, 2025) and Natural Gas Weekly Update (May 1, 2025).
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Global context is drawn from the IEA’s Oil Market Report (April 2025) and other industry analyses.
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For real-time updates, check the EIA’s next releases: Weekly Petroleum Status Report (May 7, 2025) and Natural Gas Weekly Update (May 8, 2025).
Oil Production
The latest oil production projections for the United States in 2025, based on the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook (STEO) and other recent sources, indicate the following:
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2025 Forecast:
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The EIA projects U.S. crude oil production to average 13.42 million barrels per day (bpd) in 2025, a downward revision from the prior forecast of 13.51 million bpd.
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Total liquid fuels production (including crude oil, natural gas liquids, and biofuels) is expected to average 21.2 million bpd in 2025, up from 20.7 million bpd in 2024.
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Growth is primarily driven by the Permian Basin, which accounted for nearly all of the 270,000 bpd increase in 2024 and is expected to continue leading, though at a slower pace due to declining rig counts and lower oil prices.
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The Federal Gulf of America (formerly Gulf of Mexico) is projected to produce 1.80 million bpd, Alaska 0.42 million bpd, and the Lower 48 states (excluding Gulf) 11.39 million bpd in 2025.
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Key Influences:
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Lower Oil Prices: Brent crude is forecast to average $68 per barrel in 2025, down from $81 in 2024, exerting downward pressure on drilling activity. West Texas Intermediate (WTI) is expected to average $64 per barrel.
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Tariffs and Costs: U.S. tariffs announced in April 2025, along with retaliatory tariffs (e.g., China’s 34% on U.S. imports), increase costs for steel and equipment, discouraging shale drilling. This led the International Energy Agency (IEA) to cut its U.S. oil supply growth forecast by 150,000 bpd to 490,000 bpd for 2025.
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Rig Count Decline: Posts on X and industry reports note a ~15% drop in U.S. frac crew counts in 2025, particularly in the Permian, signaling reduced activity.
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Technological Efficiency: Despite fewer rigs, well productivity improvements (e.g., AI, electronic hydraulic fracturing) sustain output, especially in the Permian.
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Recent Trends and Sentiment:
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February 2025 production was 13.16 million bpd, 191,000 bpd below the EIA’s STEO forecast, indicating potential overestimation.
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X posts suggest bearish sentiment, with some users predicting production declines of 500,000 bpd by September 2025 and a possible Texas recession due to falling rig counts and shut-ins.
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The EIA’s May 2025 STEO notes flat production in the near term, with May output at 13.37 million bpd and June at 13.4 million bpd.
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Uncertainties:
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New U.S. sanctions on Russia (January 2025) and potential sanctions on Iran could tighten global supply, indirectly supporting U.S. production but not yet factored into forecasts.
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Trade tensions and tariffs introduce demand uncertainty, particularly in Asia, reducing global oil demand growth projections to 730,000 bpd in 2025, half of which is attributed to U.S. and China slowdowns.
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The IEA warns that U.S. shale growth may slow further due to economic constraints, despite Trump’s push to maximize output.
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Critical Perspective: While the EIA and IEA provide robust data, their forecasts may overestimate U.S. production given recent misses (e.g., February’s shortfall) and industry signals of reduced activity. The narrative of sustained U.S. growth relies heavily on Permian efficiency, but declining rig counts and low prices challenge this. Conversely, global supply risks (e.g., sanctions, OPEC+ restraint) could bolster U.S. output if prices recover. Always cross-check establishment projections with on-the-ground indicators like rig counts and company reports.
Natural Gas Production
The most recent data on U.S. natural gas production indicates:
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April 2025: U.S. dry natural gas production averaged 103.0 billion cubic feet per day (Bcf/d) for the week ending April 30, 2025, according to S&P Global Commodity Insights, down 0.6% (0.6 Bcf/d) from the previous week.
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February and March 2025: Production reached a record high, averaging 106.4 Bcf/d, driven by strong output in the Northeast and Texas, per Rystad Energy.
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Full-Year 2024: Marketed natural gas production averaged 113.0 Bcf/d, a 1% increase from 2023, with growth primarily in the Permian region (Texas up 5%, New Mexico up 12%), offset by declines in Louisiana (-15%) and Pennsylvania (-2%).
2025 Forecast: The U.S. Energy Information Administration (EIA) projects dry natural gas production to average 104.5 Bcf/d for 2025, up from 103.3 Bcf/d in 2024, driven by rising LNG export demand and higher prices (Henry Hub forecast at $3.90/MMBtu in Q2 2025). Production is expected to increase to 105.0 Bcf/d in Q2 2025, nearly 3 Bcf/d more than Q2 2024, with growth in the Appalachia and Haynesville regions.
Context:
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Production has been volatile due to low prices in 2024 (Henry Hub averaged $2.09/MMBtu through August) prompting curtailments, but rising LNG exports (projected to hit 17 Bcf/d by end-2025) and colder weather are boosting output.
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X posts note a recent 4.4 Bcf/d drop from an April 18 high of 107.4 Bcf/d, reflecting market adjustments to lower LNG feedgas flows (14.9 Bcf/d).
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The Permian Basin contributes significantly, with associated gas production projected at 4.4 trillion cubic feet (Tcf) in 2025.
Critical Note: EIA forecasts are based on economic and demand assumptions that may not fully account for real-time disruptions (e.g., tariffs, weather). The recent production dip and X sentiment suggest caution, as rig counts and drilling activity remain subdued. Always verify with EIA’s Weekly Natural Gas Storage Report or Natural Gas Monthly for updates.
Current Forecasts from EIA, IE,A and others
Current Forecast for Oil (Crude Oil Prices and Market Outlook for 2025)
The forecast for crude oil in 2025 is shaped by global supply and demand dynamics, geopolitical factors, trade policies, and production trends, particularly in the United States and OPEC+ countries. Below is a detailed overview of the current oil price forecasts, production expectations, and market sentiment, based on the most recent data available up to May 6, 2025.
Crude Oil Price Forecasts for 2025
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U.S. Energy Information Administration (EIA):
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Brent Crude: Expected to average $68 per barrel in 2025, down from $74 in the March 2025 forecast and $81 in 2024. The price is projected to decline further to $61 per barrel in 2026 due to rising global oil inventories starting mid-2025.
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West Texas Intermediate (WTI): Forecast to average $64 per barrel in 2025, down from $70 in earlier projections, and $57 per barrel in 2026.
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Reasoning: The EIA cites strong non-OPEC+ production growth (led by the U.S., Canada, Brazil, and Guyana), slower global demand growth (0.9 million bpd in 2025), and OPEC+ unwinding voluntary production cuts, leading to inventory builds of 0.6–0.7 million bpd in Q2–Q4 2025.
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International Energy Agency (IEA):
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Brent prices are expected to remain under pressure due to a projected 1 million bpd surplus in 2025, even if OPEC+ maintains current cuts. Prices fell to near three-year lows around $70 per barrel in March 2025, with further downside risks if OPEC+ increases output as planned.
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The IEA lowered its global demand growth forecast by 300,000 bpd to 730,000 bpd for 2025, citing trade tensions and weaker economic growth.
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Other Analysts:
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Goldman Sachs: Predicts Brent at $56 per barrel in 2025, a $3 reduction from prior forecasts, due to high spare capacity and recession risks.
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Citi: Suggests Brent could average $60 per barrel or dip to $50 per barrel if OPEC+ does not deepen cuts, driven by slowing demand and robust non-OPEC+ supply.
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Long Forecast: Projects Brent to peak at $100.89 per barrel in March 2025 but decline to $83.81 by December, with a range of $73.84–$100.89.
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WalletInvestor: Forecasts WTI to reach a high of $85.56 in July 2025 but fall to $78.64 by December.
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Standard Chartered: Contrasts with bearish views, arguing no inevitable supply glut, with U.S. production growth slowing to 367,000 bpd in 2025, potentially supporting higher prices if Brent exceeds $85 per barrel (OPEC+ breakeven for many members).
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Current Prices (as of May 6, 2025):
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Brent futures are trading around $65–$66 per barrel, down 13% year-to-date.
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WTI futures are near $61.25 per barrel, down 14% year-to-date.
Global Oil Supply and Production Forecasts
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Global Supply:
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The EIA forecasts global liquid fuels production to increase by 1.3 million bpd to 104.4 million bpd in 2025, driven by non-OPEC+ countries (1.2 million bpd growth), particularly the U.S., Canada, Brazil, and Guyana.
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The IEA projects global supply growth of 1.2 million bpd in 2025, down 260,000 bpd from prior estimates due to reduced U.S. and Venezuelan output. Non-OPEC+ supply is expected to rise by 1.3 million bpd.
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U.S. Production:
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The EIA’s latest Short-Term Energy Outlook (STEO, April 2025) projects U.S. crude oil production to average 13.42 million bpd in 2025, revised down from 13.51 million bpd due to lower oil prices and tariffs increasing drilling costs.
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Production is expected to peak at 14 million bpd in 2027, driven by the Permian Basin, before declining as shale productivity wanes.
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The IEA revised U.S. supply growth downward by 150,000 bpd to 490,000 bpd in 2025, citing tariffs and a $65 per barrel breakeven for shale drilling.
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OPEC+ Production:
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OPEC+ plans to increase output by 411,000 bpd in May 2025, tripling prior targets, though actual increases may be lower due to overproduction by members like Kazakhstan and Iraq.
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The EIA expects OPEC+ production to remain flat in 2025 compared to 2024, with a 0.5 million bpd increase in 2026 as cuts unwind.
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If cuts are not extended, prices could face further downward pressure, with some analysts warning of Brent dipping to $50 per barrel.
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Global Oil Demand Forecasts
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EIA:
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Global liquid fuels consumption is forecast to grow by 0.9 million bpd to 104.1 million bpd in 2025, down 0.4 million bpd from the March STEO, and 1.0 million bpd in 2026. Growth is below pre-pandemic trends due to trade tensions and slower economic growth.
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Non-OECD Asia (India: +0.3 million bpd, China: +0.2 million bpd) drives most demand growth.
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IEA:
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Global demand growth is projected at 730,000 bpd in 2025, revised down by 300,000 bpd, and 690,000 bpd in 2026, reflecting trade disputes and macroeconomic fragility.
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Q1 2025 saw robust demand growth of 1.2 million bpd year-on-year, the strongest since 2023, but future growth is tempered by tariff impacts.
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Key Factors Influencing the Forecast
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Trade Tensions and Tariffs:
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U.S. tariffs (10% universal, higher on some countries) announced April 2, 2025, and China’s retaliatory 34% tariffs on U.S. imports increase costs for shale drilling (e.g., steel, equipment), reducing U.S. production growth.
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Tariffs are expected to slow global economic growth, lowering oil demand by 400,000 bpd in 2025.
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OPEC+ Policy:
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OPEC+’s decision to accelerate production increases (411,000 bpd in May, potentially 800,000 bpd over two months) adds downward pressure on prices.
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Some analysts (e.g., Standard Chartered) argue OPEC+ may delay cuts until Brent exceeds $85 per barrel, needed by members like Saudi Arabia to balance budgets.
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Geopolitical Risks:
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U.S. sanctions on Russia (January 2025) and potential sanctions on Iran and Venezuela could reduce global supply by up to 1 million bpd, supporting prices.
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Middle East tensions and Syrian unrest pose risks but have not yet disrupted supply.
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U.S. Shale Dynamics:
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The Permian Basin drives U.S. growth, but rig counts are down 15% in 2025, and breakeven costs for new shale wells are around $65 per barrel, making low prices unsustainable for expansion.
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The EIA projects a shale peak in 2027 at 10 million bpd, followed by a decline to 9.33 million bpd by 2050.
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Demand Uncertainty:
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Slower demand growth in China and the U.S., coupled with rising electric vehicle adoption, caps consumption.
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Cold weather in Q1 2025 boosted demand, but trade disputes and economic slowdowns temper the outlook.
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Market Sentiment and Contrarian Views
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Bearish Sentiment:
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Posts on X and analyst reports (e.g., Citi, JPMorgan) reflect expectations of oversupply, with Brent potentially falling to $50–$60 per barrel if OPEC+ increases output and demand weakens further.
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The EIA and IEA emphasize inventory builds starting Q2 2025, driven by non-OPEC+ growth outpacing demand.
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Bullish Counterarguments:
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Standard Chartered and some X users argue that U.S. production declines (potentially 500,000 bpd by September 2025) and OPEC+ restraint could push Brent above $90 per barrel, especially if China’s 7% growth target drives demand.
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Geopolitical disruptions or weather-related shut-ins (e.g., North American cold snaps) could tighten markets, as seen in January 2025 when Brent hit $81 per barrel.
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The Bottom Line
The EIA has revised some of its predictions on oil and gas prices, and we are seeing reports that vary from $50-$60 if OPEC+ follows through with its production increase, to the prediction of the U.S. declines in production to have the price roll to $90.
Today, we had some articles discussing Saudi Arabia’s budget requirements of $90 to pay for their projects. I think that the numbers in some publications indicate that they could get by with $80 and borrow money for the short term.
All of this to say, I am still a bull. The numbers look to be in the $80 to $85 range if we have a stable return on trade between Asia, India, and the United States. If China can remain flat we will see the $80 range. The $90 is too high, but it may spike to that point depending on how the United States production is handled.
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