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U.S.’s natural gas consumption is set to decline 4% this year to an average of 81.7 billion cubic feet per day (Bcf/d), the Energy Information Administration said in its May Short-Term Energy Outlook (STEO) last week.
The drop reflects mainly a 7.1% decrease in gas demand from the industrial sector, due to the Covid-19 restrictions and lower manufacturing activity. Industrial gas consumption is forecast to average 21.3 Bcf/d in 2020, Kallanish Energy reports.
In terms of production, U.S. dry natural gas output is estimated to average 89.8 Bcf/d this year, from the 92.2 Bcf/d record in 2019. The decline will happen mostly in the Appalachian and Permian regions. Low prices are reducing associated gas production from oil wells, but also discouraging producers from engaging in gas-directed drilling.
According to the STEO, dry gas production will average 84.9 Bcf/d next year, rising in the second half in response to higher prices.
Henry Hub spot prices are forecast to average $2.14 per million British thermal units (MmBtu) in 2020. As output declines, prices start recovering and could average $2.89/MmBtu in 2021, the EIA said.
In April, the Henry Hub natural gas spot price averaged $1.73/MmBtu – which the EIA said it was the lowest monthly average since March 2016.
