The EIA’s March 2025 Short-Term Energy Outlook (STEO) forecasts tight global oil markets until mid-2025 as global inventories drop due to decreasing crude oil production from Iran and Venezuela. Brent crude is projected to rise from $70 to $75 per barrel by 3Q25, but increasing oil inventories are expected to pressure prices downward from late-2025 through 2026. Cold weather drove natural gas use, leaving end-of-March inventories 10% below the 5-year average and 6% below prior forecasts. Consequently, the 2025 Henry Hub spot price forecast rose 11% to $4.20 per million British thermal units, with 2026 expected near $4.50/MMBtu (up 8%). U.S. electricity sales are projected to increase by 3% in 2025 due to residential and commercial demand, leading to a 3% rise in power generation this year (up from 2%), with another 1% growth in 2026. Potential tariff effects were not included in the outlook.

The Labor Department reported that the consumer price index fell by 0.1% in March (seasonally adjusted), following a 0.2% increase in February and (+0.5%) in January. The all items index rose (+2.4%) over the last 12 months, 0.4 percentage points lower than February’s report. Energy dropped (-2.4%), as a (-6.3%) seasonally adjusted gasoline price decrease more than offset increases in electricity (+0.9%) and natural gas (+3.6%). The food index rose (+0.4%), following a (+0.2%) increase the previous month. Core CPI inflation, excluding food and energy, rose (+0.1%) in March, following a (+0.2%) February increase. The annual core CPI inflation rate rose (+2.8%), a decrease from the previous month's (+3.1%) and the smallest 12-month rise since March 2021. The shelter index rose (+4.0%), its lowest 12-month increase since November 2021. Significant year-over-year increases occurred in indexes including motor vehicle insurance (+7.5%), education (+3.9), medical care (+2.6%), food (+2.4%), and recreation (+1.9%).

The Labor Department reported that the producer price index for final demand, which measures the prices that producers pay for goods and services, decreased (-0.4%) in March, following upwardly revised increases of (+0.1%) in February and (+0.6%) in January. For the 12-month period ending in March 2025, the PPI rose by an unadjusted (+2.7%). A (-0.9%) decline in prices for final demand goods, the largest decline since October 2023, was responsible for over 70% of the decrease in the headline number. An 11.1% drop in gasoline prices accounted for two-thirds of the decrease in final demand goods. Final demand services prices fell (-0.2%), the largest decline since July 2024, led by a (-0.7%) drop in final demand trade service margins. Excluding food, energy, and trade services, the core PPI increased (+0.1%), following (+0.4%) the previous 2 months. For the 12-month period ending in March 2025, core PPI inflation rose by an unadjusted (+3.4%).