U.S. oil companies are expected to reduce oil output by 500,000 barrels per day in 2020 as producers cut back on operations because of low commodity prices, said the U.S. Department of Energy and its Energy Information Administration in its Short-Term Energy Outlook report.
That means less U.S. crude oil will be produced in 2020 and 2021, it said.
The report also said that the U.S. energy sector including renewables is being hurt by the coronavirus and stay-at-home orders, Kallanish Energy reports.
The EIA is projecting 2020 oil production will average 11.8 million barrels per day, down 9.5% from previous estimates. That is due to low prices and the coronavirus that has flattened fuel demand, in addition to expected production cuts.
The U.S. produced more than 12.3 million barrels per day, a record high, in 2019.
Such a drop in 2020 would mark the first decrease in annual U.S. crude oil production since 2016.
It said that 2021 production is likely to be 11.03 million barrels per day, down 13% or 700,000 barrels per day.
The EIA is also forecasting that the United States will return to being a net importer of crude oil and petroleum products in the third quarter 2020 and remain a net importer in most months through the end of the forecast period.
That is due to higher net imports or cruder oil and lower net exports of petroleum products.
Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export.
It said that U.S. refinery runs are expected to decline significantly in 3Q 2020.
The report also said that U.S. natural gas production and demand will both be lower in 2Q and 3Q 2020.
It is projected to grow 1% in 2020 with prices starting to rise in the late 2Q 2020 as demand grows.
There will also be less global demand for U.S. LNG exports, it said.
It is projecting 6.6 billion cubic feet per day of LNG shipments in 2Q 2020 and 6.0 Bcf/d in 3Q 2020, it said.
Natural gas sales have been hurt by low prices and mild winter weather that has reduced residential sales by nearly 6%.
The report also says that U.S. coal generation will drop by 19% in 2020 and that U.S. coal production will fall by 22% in 2020 to 537 million short tons.
It also said that total U.S. electric power generation will decline by 3%.
Electricity demands at businesses are likely to decline by nearly 5% over the next few months and to increase at homes due to the stay-at-home orders tied to the coronavirus, it said.
The U.S. is projected to get 19.4 gigawatts of new wind capacity in 2020 and 12.6 gigawatts of new utility-scale solar power, it said.
Those projections are 5% and 10% lower, respectively, than previous estimates.
For the summer driving season, gasoline will likely average $1.58 per gallon, down from the $2.72 a gallon average last summer, it said.
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