Key Takeaways
- U.S. oil production is forecast to reach 13.83 million barrels per day (bpd) in August 2026, a slight increase from July, with annual output on track to hit a record 13.80 million bpd for the full year.
- Natural gas production is projected to hit 122.6 billion cubic feet per day (Bcf/d) in August, rising further to 123.2 Bcf/d in September as associated gas from the Permian Basin continues to drive supply.
- Global Brent crude prices are expected to average $85 per barrel in Q3 2026 due to inventory drawdowns and geopolitical constraints, before potentially softening to $69 per barrel in 2027.
- Natural gas inventories are on track to reach a decade-high of 4 trillion cubic feet by October, providing a significant buffer for the upcoming winter heating season.
The U.S. Energy Information Administration (EIA) released its August 2026 Short-Term Energy Outlook (STEO), signaling a period of robust domestic production growth. U.S. crude oil output is expected to average 13.83 million bpd in August, slightly surpassing July's 13.82 million bpd. While a minor dip to 13.77 million bpd is anticipated in September, the broader trajectory remains upward, with 2027 production forecast to reach 14.19 million bpd.
The surge is largely attributed to efficiency gains and increased activity in the Permian Basin, where major operators like Exxon Mobil (XOM) and Chevron (CVX) have optimized drilling operations. Market analysts note that the rising production plateau in the U.S. is a critical counter-narrative to OPEC+ supply cuts, effectively capping major price rallies. Despite this domestic growth, the EIA revised its global demand forecast slightly downward, reflecting a cooling global economy.
In the natural gas sector, the U.S. is cementing its position as a global leader, with production expected to average 122.5 Bcf/d for the full year 2026. This would eclipse the previous record of 118.5 Bcf/d set in 2025. The growth is heavily supported by associated gas—gas produced as a byproduct of oil extraction—particularly in West Texas and New Mexico.
The outlook for natural gas remains strong despite short-term maintenance at key export facilities. Freeport LNG underwent maintenance in July and August, which temporarily reduced feedgas demand and helped boost domestic storage levels. With inventories projected to hit their highest levels since 2016 by October, the U.S. is well-positioned to meet both domestic heating needs and rising export demand from Europe and Asia.
Looking ahead, the EIA expects the Brent crude spot price to remain elevated near $85 per barrel through the third quarter of 2026. This price level is supported by continued disruptions in the Strait of Hormuz, which have constrained Middle Eastern shipments. However, as global inventories are expected to rebuild in early 2027, the agency forecasts a gradual decline in prices, offering potential relief for energy consumers in the long term.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.