About half of US households heat mainly with natural gas or propane, and the US Energy Information Administration expects those homes to spend less on energy this winter than last winter. Homes that heat mainly with electricity or heating oil will spend more, the agency said in its 2026-27 Winter Fuels Outlook, published October 6 alongside the October Short-Term Energy Outlook. The steepest increase falls on heating oil users, about 3% of US households, concentrated in the Northeast: EIA puts their fuel costs up roughly 21% from last winter. Milder Northeast weather is expected to offset part of a forecast heating oil price increase of more than 30%.
Fuel inventories explain the gap
EIA Administrator Tristan Abbey tied the gap to fuel inventories: "high natural gas inventories entering the winter season provide a cushion for heating demand," he said, while heating oil users face steeper prices because distillate fuel supplies remain limited, Abbey said.
EIA expects national temperatures this winter to track last winter and the prior 10-winter average, though it flagged that a strong El Nino could shift weather patterns and, with them, household heating demand and costs. East Coast distillate stocks sat 32% under their five-year seasonal average in September, and EIA expects them to stay 20% to 30% below that average through the winter.
Oil markets tighten on Middle East disruptions
In global oil markets, EIA expects crude production and exports out of the Middle East to climb gradually as transits through the Strait of Hormuz ease and producers lean on alternative routes and ship-to-ship transfers. It forecasts those workarounds will cut production shut-ins from 4.5 million barrels a day in the fourth quarter of 2026 to 2.7 million barrels a day in the first quarter of 2027.
Brent spot prices averaged $114 a barrel in September, up $23 from August. EIA now forecasts a fourth-quarter 2026 average of $105 a barrel, $14 above last month's projection, citing Middle East disruptions, shrinking global inventories and tight diesel supply. Global inventories dropped 1.9 million barrels a day in the third quarter, the agency estimated, with another 0.7 million barrel-a-day drop expected in the fourth. EIA sees Brent settling back to an $84 average in 2027 as flows normalize and stockpiles rebuild.
At the pump, US retail gasoline and diesel both rose in September, to $4.35 and $6.29 a gallon. EIA expects diesel to hold above $6 a gallon through October, then ease to about $4.50 a gallon by 2027.
Natural gas and electricity outlook
Gas storage should enter the heating season 2% above its five-year average, EIA said, and strong output growth plus those full tanks are expected to keep prices in check even as LNG exports climb. The agency forecasts Henry Hub averaging $3.16 per million British thermal units in 2027, a 9% drop from 2026.
Wholesale power prices are set to average $52 a megawatt-hour in 2026, up 11% from 2025, with the rise concentrated in a handful of regions tied to weather. Most hubs track close to last year, but EIA pointed to a 41% jump at PJM against a 23% drop at Northwest Mid-Columbia. Record summer heat pushed electricity use up 4% in the third quarter versus a year earlier, led by homes and businesses. Looking to 2027, EIA expects commercial and industrial demand to rise nearly 3% while residential demand edges down.
October STEO forecast
| Indicator | 2025 | 2026 | 2027 |
|---|---|---|---|
| Brent crude ($/barrel) | $69 | $96 | $84 |
| Retail gasoline ($/gallon) | $3.10 | $3.91 | $3.56 |
| US crude oil production (million b/d) | 13.7 | 13.9 | 14.3 |
| Henry Hub gas ($/MMBtu) | $3.53 | $3.48 | $3.16 |
| US LNG gross exports (Bcf/d) | 15 | 18 | 19 |
