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
Mike Newland with the Propane Education & Research Council shares how producers can prepare for winter weather and the benefits of propane.
Verified U.S. data show real leather’s carbon footprint is lower than advertised — an edge for the American cattle industry in both marketing and byproduct value.
Stagger buys and diversifies fertilizer sources — watch CBAM, India’s tenders, and Brazil’s import pace to time urea, phosphate, and potash purchases.
Recognizing phosphorus and potash as critical minerals underscores their importance in crop production and food security, providing producers with an added layer of risk protection.
Pork producers should prioritize health and productivity gains, hedge feed and hogs selectively, and watch Brazil’s export pace and China’s sow policy for price signals.
For tight margins, contract grazing leverages existing acres into new income streams and spreads risk. Here are some tips for row crop farmers looking to diversify.
Texas Cattle Feeders Association Chairman Robby Kirkland explains how the ongoing U.S.-Mexico border closure impacts feed yards that rely on Mexican cattle due to the New World Screwworm.
Global nitrogen and phosphate prices remain high despite improved supply fundamentals, with limited Chinese exports and stronger fall applications tightening availability.
Record output, larger stocks, and softer exports point to a well-supplied domestic ethanol market as harvest progresses.

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:

Corn and wheat exports remain supportive, but weaker soybean demand — especially from China — continues to pressure oilseed markets.
China’s pullback is hitting core U.S. commodities hard, reshaping export expectations for soybeans, cotton, grains, and livestock.
Slower grain movement may pressure basis, but falling diesel prices could help offset transportation costs.
Regional differences indicate that family ownership is universal, but farm structure and commodity mix determine the extent to which these operations drive agricultural output.
A new study found that retaining the EPA’s half-RIN credit protects soybean demand, farm income, and crushing-sector strength while preserving biofuel market flexibility.
Rising federal debt is increasing pressure on Washington to limit spending, which could tighten future funding and delivery for agricultural programs.