Oil Price to Fall Sharply in Coming Months on Stock Buildup, OPEC Hikes: EIA
The Energy Information Administration said on Tuesday it expects the price of crude oil to decline significantly in the coming months, weighed down by large oil inventory builds as OPEC and its allied members increase oil production.
In its monthly Short-Term Energy Outlook, EIA predicts Brent crude oil price to fall to an average of $59/bbl in the fourth quarter and around $50/bbl in early 2026, sharply lower than its August average of $68/bbl.
On Tuesday, the front-month November Brent crude contract was trading at around $66.50/bbl.
The agency also expects global oil inventory builds to average more than 2 million b/d between Q3 this year through Q1 2026.
EIA said that it finalized its monthly outlook before OPEC+ on Sunday announced it planned to raise production by 137,000 b/d in October. The oil producer alliance had already fully reversed a 2.2 million b/d cutback it made in 2023 with a series of output increases from April to September, while other collective curbs of 2 million b/d remained in place.
Still, the agency said low oil prices in early 2026 will lead to a reduction in supply by both OPEC+ and some non-OPEC producers, which should moderate inventory builds later in 2026. EIA expects Brent’s price to average $51/bbl next year.
The expected decline in oil prices should lead to a drop in gasoline prices. EIA expects average U.S. regular-grade gasoline at about $3.10/gal this year, down 20cts from a year ago. The agency also forecasts retail gasoline to fall further to an average of $2.90/gal in 2026, with the annual average price below $3/gal in all regions except the West Coast.
EIA also predicts a slight increase in U.S. gasoline consumption next year, marking the first time the agency has forecast higher gasoline demand in 2026. It said the latest gasoline consumption forecast was due to an upward revision to the size of the workforce and lower expected gasoline prices.
The agency also expects U.S. drivers’ gasoline expenditure as a share of disposable personal income to be the lowest since at least 2005, excluding the pandemic-affected year of 2020. EIA now estimates that expenditure will average less than 2% of disposable income this year, down from an average of 2.4% over the previous decade.
–Reporting by Frank Tang, ftang@opisnet.com; Editing by Michael Kelly,
mkelly@opisnet.com