EIA Forecast Signals Mixed Energy Cost Outlook Ahead

Fuel costs ease over the long term, but fertilizer energy remains volatile.

energy pkg.jpg

Market Day Report

NASHVILLE, TENN. (RFD NEWS)Energy markets are sending conflicting signals to agriculture, with lower long-term fuel prices but continued short-term volatility in heating and fertilizer inputs.

The U.S. Energy Information Administration’s February Short-Term Energy Outlook (PDF Version) projects Brent crude oil averaging about $58 per barrel in 2026 and $53 in 2027 as global production continues to outpace demand and inventories build. Despite recent geopolitical disruptions, expanding output worldwide is expected to keep diesel and fuel costs generally softer over time.

Natural gas tells a different story in the near term. The Henry Hub price averaged $7.72 per MMBtu in January after winter weather tightened supplies. Storage levels are now projected to end winter about 8 percent lower than previously expected. Prices should moderate later as drilling increases, with averages near $4.30 this year and $4.40 in 2027.

U.S. natural gas production is forecast to grow 2 percent in 2026, while rising solar generation and modest coal use help meet expanding electricity demand from industry and data centers.

Lower propane prices are also expected as higher gas production boosts supply.

Related Stories
Cover crops may improve soil and reduce input needs over time, but producers should budget carefully before expanding acreage.
Rising input costs continue weighing on producer outlooks despite stronger expectations for land values.
Iowa Congressman Randy Feenstra says the proposal would allow retailers to decide whether they want to offer E15 year-round.
The award recognizes wheat varieties that deliver strong results throughout the milling and baking process

Tony St. James joined the RFD-TV talent team in August 2024, bringing a wealth of experience and a fresh perspective to RFD-TV and Rural Radio Channel 147 Sirius XM. In addition to his role as Market Specialist (collaborating with Scott “The Cow Guy” Shellady to provide radio and TV audiences with the latest updates on ag commodity markets), he hosts “Rural America Live” and serves as talent for trade shows.

LATEST STORIES BY THIS AUTHOR:

Shrinking Select beef supplies are continuing to reshape cattle pricing and beef demand trends.
Applications are open through July 27, 2026, on Grants.gov.
Total red meat supplies were up 4 percent from March but down 4 percent from April 2025.
The risk is prolonged crop weakness. Stable farmland values remain critical if losses continue.
Year-to-date red meat production is down 2 percent, with beef lower and pork higher.
For producers, demand is strong, but drought, disease, and costs still shape supply.