EIA expects substantial increase in global oil inventories
Key Highlights
- Global oil inventories are expected to rise through 2026, putting downward pressure on prices.
- China’s stockpiling has helped limit price declines, even as global supply increases.
- US crude oil production hit a record of over 13.6 million b/d in July, with forecasts remaining steady at around 13.5 million b/d through 2026.
- Uncertainties remain regarding China’s future oil demand and the ability of OPEC+ members to meet production targets, influencing the global supply outlook.
The US Energy Information Administration (EIA) expects global oil inventories to rise through 2026, leading to significant downward pressure on oil prices in the coming months. EIA, in its October Short-Term Energy Outlook (STEO), forecasts Brent crude oil prices will drop to an average of$62/bbl in fourth-quarter 2025 and $52/bbl in 2026.
Brent crude oil spot prices averaged $68/bbl in September, unchanged from August average. Several factors have likely offset strong growth in supply to keep oil prices relatively stable in recent months, EIA noted.
"One likely factor is China’s additions to its oil stockpiles. China does not report data on its oil inventories," EIA said, but "based on imports, exports, refining data, and oil inventory data from third-party and official sources, we [EIA] assess that China has accumulated significant oil inventories this year.
Because China’s inventory builds have been strategic in nature," EIA continued, "they have potentially acted as a source of demand, limiting downward price pressures more than our estimated balances would otherwise suggest."
“It is also possible that global oil demand was higher over the summer than we currently estimate. The lag in actual oil demand data, particularly outside of the OECD, means that our estimates for global demand for second-quarter 2025 and third-quarter 2025 are still a mix of model results and initial data observations for much of the world," EIA said.
Inventory builds are significant even with expectation that OPEC+ will produce below its targets in the coming months, according to EIA forecasts. Along with strong production growth among non-OPEC countries, the forecast increase in global oil inventories is based on the OPEC+ announcements to increase the group’s oil production.
“OPEC+ began increasing production in April 2025, and for much of this year, the group’s production has been close to its targets. Last month, the group increased production targets through October 2025, but there is uncertainty regarding some members’ ability to reach the targets given near term limits on spare capacity,” EIA said.
According to EIA, global production growth is led by countries outside of OPEC+, where production is expected to rise by 2.0 million b/d in 2025 and by 0.7 million b/d in 2026. OPEC+ is expected to increase total liquids production by 0.6 million b/d in both 2025 and 2026, as the group unwinds crude oil production cuts. However, according to EIA, OPEC+ production will remain below announced targets, preventing inventory builds from accelerating too quickly and limiting the decrease in oil prices.
Global liquid fuels consumption by non-OECD countries is expected to grow by 1.2 million b/d in 2025 and 1.0 million b/d in 2026, while OECD consumption is forecast to fall by 0.1 million b/d in 2025 before increasing by 0.1 million b/d in 2026, according to EIA. Most non-OECD growth is concentrated in Asia, with liquid fuels consumption in India and China adding more than 0.4 million b/d of consumption by 2026 compared with 2024.
In EIA’s forecast, global oil inventories will increase by an average of 2.1 million b/d in 2026, compared with an average annual increase of 1.9 million b/d in 2025. The pace at which China continues to purchase oil to fill inventory and any major supply disruptions are key forecast uncertainties.
US crude production
In July, US crude oil production averaged more than 13.6 million b/d, a monthly record. EIA raised its forecast for crude oil production in the Gulf of Mexico as some projects are ramping up production faster than expected.
Although EIA expects crude oil production will decline from its recent peak as oil prices fall, the agency forecasts US crude oil production will average 13.5 million b/d in both 2025 and 2026. EIA’s 2026 forecast increased by 0.2 million b/d from last month.
US natural gas
The Henry Hub natural gas spot price in EIA’s forecast increased from just under $3.00/MMbtu in September 2025 to $4.10/MMbtu in January 2026. The January forecast price is almost 50¢/MMbtu lower than it was in last month’s outlook.
Lower natural gas prices largely reflect EIA’s expectation that US natural gas production will be higher than previously forecast, leading to more natural gas in storage compared with its previous forecast.
Meantime, the US will add 5 bcfd in LNG export capacity in 2025 and 2026 as Plaquemines LNG and Corpus Christi LNG Stage 3 projects come online. The additions to LNG export capacity will increase total US LNG exports to 14.7 bcfd in 2025 and to 16.3 bcfd in 2026, up from 11.9 bcfd in 2024.