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U.S. Industrial Demand For Natural Gas Drops As Economy Slows

Editor OilPrice.com
·2 mins read

The U.S. industrial sector saw its consumption of natural gas drop as economic activity slowed with the lockdowns in response to the COVID-19 pandemic, the U.S. Energy Information Administration (EIA) said on Monday.

Industrial consumption of natural gas fell from 25.4 billion cubic feet per day (Bcf/d) in January 2020 to 20.1 Bcf/d in June 2020, the EIA’s Natural Gas Monthly showed.

Industrial deliveries of natural gas in June were 4.6 percent lower than the 21.1 Bcf/d in June 2019, and hit the lowest level for the month of June since 2016.

This year, consumption of natural gas by the industrial sector hit its lowest point in May, when it slumped by 8 percent compared to the same month of last year. Industrial consumption of natural gas in May 2020 marked the largest year-over-year decline since July 2009, during the 2007–2009 recession.

Since March, industrial activity among industries that consume natural gas has also declined. Chemical, paper, primary metals, and petroleum and coal product industries account for nearly 75 percent of the natural gas used in U.S. manufacturing, the EIA says.  

This year, consumption of natural gas by U.S. industries is expected to drop by 4.4 percent year over year, according to the EIA Short-Term Energy Outlook for September 2020.

EIA expects that total U.S. consumption of natural gas will average 82.7 Bcf/d this year, down by 2.7 percent year over year, with the industrial sector posting the largest decline in consumption, according to the latest STEO.

In 2021, consumption of natural gas by the industrial sector is expected to rise by 1.1 percent on the year.

Growth next year will be underpinned by growth in the overall economy and the natural gas-weighted industrial production index. The index reflects the growth of the underlying manufacturing subsectors and the relative importance of those subsectors to total natural gas consumption, the EIA said.

By Tsvetana Paraskova for Oilprice.com

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