Natural gas demand for the U.S. industrial sector is falling amid slowing economy and is expected to contract by 4.4% this year, Kallanish Energy reports.
According to the U.S.’s Energy Information Administration (EIA), natgas consumption by U.S. industries typically rises in the fall and winter, and declines in the spring and summer in response to changes in temperature-related heating demand.
General economic conditions also influence industrial natural gas consumption, as higher demand for manufactured goods lifts demand for natgas.
However, due to the Covid-19 pandemic and the global economic slowdown caused by it, consumption dropped from 25.4 billion cubic feet per day (Bcf/d) in January to 20.1 Bcf/d in June. This volume was almost 1 Bcf/d lower than June 2019.
The annual decline in natural gas consumption in the sector started in March, but it was in May that demand sunk the most. The EIA said natgas consumption in the U.S. industry declined 8% y-o-y that month. It was the largest fall since July 2009.
Industries such as chemicals, paper, primary metals, petroleum and coal products account for nearly 75% of the natural gas used in U.S. manufacturing. In 2019, the U.S. industrial gas demand was flat, after growing 5.4% in 2018.
The EIA forecasts that by year-end, consumption of the blue fuel will decline 4.4% and then grow 1.1% in 2021. This is based on the assumption that demand for natgas will increase next year due to growth in the overall economy and manufacturing index. Yet, new waves of the Covid-19 coronavirus could put growth prospects into jeopardy.
This post appeared first on Kallanish Energy News.