Oil & Energy

Google Ad

EIA STEO expects U.S. consumption of natural gas will average 82.9 billion cubic feet per day (Bcf/d) in 2021, down 0.4% from 2020. The decline in U.S. natural gas consumption is a result of less natural gas consumed for electric power generation because of higher natural gas prices compared with last year.

 EIA STEO April 21 Natural Gas Prices

The EIA said April Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty because responses to COVID-19 continue to evolve. U.S. gross domestic product (GDP) declined by 3.5% in 2020 from 2019 levels.

This STEO assumes U.S. GDP will grow by 5.6% in 2021 and by 4.2% in 2022. The U.S. macroeconomic assumptions in this outlook are based on forecasts by IHS Markit.

Highlights

  • EIA expects U.S. consumption of natural gas will average 82.9 billion cubic feet per day (Bcf/d) in 2021, down 0.4% from 2020.
  • The decline in U.S. natural gas consumption is a result of less natural gas consumed for electric power generation because of higher natural gas prices compared with last year.
  • In 2021, we expect residential and commercial natural gas consumption will rise by a total of 1.1 Bcf/d from 2020 and industrial consumption will rise by 1.4 Bcf/d from 2020.
  • Rising consumption outside of the power sector results from expanding economic activity and colder temperatures in 2021 compared with 2020.
  • We expect U.S. natural gas consumption will average 82.1 Bcf/d in 2022.

Henry Hub Forecast

In March, the U.S. benchmark Henry Hub natural gas spot price averaged $2.62 per million British thermal units (MMBtu), which is down from the February average of $5.35/MMBtu. The Henry Hub price declined primarily because the cold weather and related high demand and market disruptions that drove prices to recent highs in February abated in March.

EIA expects Henry Hub spot prices will average $2.73/MMBtu in the second quarter of 2021 and will average $3.04/MMBtu for all of 2021, which is up from the 2020 average of $2.03/MMBtu. We expect that continued growth in liquefied natural gas (LNG) exports, with only a slight corresponding increase in dry natural gas production, will contribute to the average Henry Hub spot price rising to $3.11/MMBtu in 2022.

US Natural Gas Production

  • EIA forecasts that U.S. production of dry natural gas will average 91.4 Bcf/d in 2021,  almost the same as the 2020 average.
  • EIA sees dry natural gas production falling  to a low point of 90.8 Bcf/d in May 2021 before steadily increasing through most of the remainder of 2021, reaching a high of 92.4 Bcf/d in November 2021.
  • The increase in production in 2021 reflects higher forecast natural gas prices as well as higher forecast crude oil prices, which we expect will contribute to more associated natural gas production, especially in the Permian region.

 US Natural Gas Inventories

  • EIA estimates that natural gas inventories ended March 2021 at nearly 1.8 Tcf, which is 2% lower than the five-year (2016–20) average.
  • The winter of 2020–21 had more natural gas withdrawn from storage than the five-year average largely as a result of the cold February temperatures that occurred amid low natural gas production. 
  • EIA expect that rising natural gas production and lower natural gas consumption for power generation than in the past two summers will contribute to storage injections outpacing the five-year average in 2021.
  • EIA  forecast that natural gas inventories will end the 2021 injection season (end of October) at more than 3.7 Tcf, which is equal to the five-year average.

Source: EIA

From The TradersCommunity Desk

Log in to comment
Discuss this article in the forums (0 replies).