“EIA expects US natural gas consumption will decline by 3% in 2020“, the agency said in the report on Tuesday. “The main driver of the decline is lower consumption in the industrial sector because of COVID-19 mitigation efforts and related reductions in economic activity. Forecast US natural gas consumption declines by 5% in 2021 as a result of expected rising natural gas prices”.
The Administration said it expects falling production will put upward pressure on natural gas prices through the end of 2021, lifting spot prices to an average of $1.93/million British thermal units in 2020 and $3.10/million British thermal units in 2021. The Henry Hub natural gas spot price averaged $1.63 per million British thermal units in June, the lowest inflation-adjusted price going back to at least 1989, as a result of low demand, the report read.
“The rising prices will reduce the use of natural gas in the electric power sector, which will more than offset increases in natural gas consumption in the industrial, commercial, and residential sectors”, the agency said.
The Administration added that it expects US dry natural gas production to average 89.2 billion cubic feet per day in 2020, down from the 92.2 billion cubic feet produced daily in 2019.
“This 3 percent decrease is the result of falling natural gas prices that caused a decline in drilling activity and production curtailments”, it said.
For 2021, the annual average dry natural gas production is expected to decline by 6 percent to 84.2 billion cubic feet daily.
The agency forecasts working natural gas in storage will reach 4,039 billion cubic feet at the end of October, which would be the most US natural gas in storage as of the end-of-October on record.
