U.S. Crude, Natural Gas Demand to Fall in 2020, Oil Decline Less than Forecast — EIA

NEW YORK (Reuters) — The U.S. Energy Information Administration on Tuesday released data forecasting a drop in U.S. production of crude oil and natural gas in 2020, with the decline in oil production being less than previously forecast. 

 U.S. crude oil production is expected to fall by 600,000 barrels per day (bpd) in 2020 to 11.63 million bpd. Previous forecasts had predicted a decline of 670,000 bpd.

The agency now expects U.S. petroleum and other liquid fuel consumption to drop 2.1 million bpd to 18.34 million bpd in 2020, a smaller decline than its previous forecast for a drop of 2.4 million bpd.

Oil prices collapsed this year as the coronavirus pandemic slammed global demand and restricted travel across the world. Demand worldwide has started to recover as some countries ease lockdowns and stay-at-home orders.

The EIA said it expects 2020 world oil consumption to drop by 8.15 million bpd to 92.89 million bpd, a smaller decline than the 8.34 million bpd previously forecast.

The largest declines in U.S. liquid fuels consumption have already occurred and consumption will generally rise through the second half of 2020 and in 2021, the agency said.

For 2021, U.S. crude production is expected to decline by 620,000 bpd to average about 11.01 million bpd after dipping under 11 million bpd during the second quarter.

U.S. oil demand in 2021 is expected to rise by 1.6 million bpd to 19.94 million bpd, compared to a previous estimate for an increase of 1.4 million bpd.


Natural Gas

The EIA projected dry gas production will drop to 89.24 billion cubic feet per day (bcfd) in 2020 and 84.23 bcfd in 2021 from the all-time high of 92.21 bcfd in 2019.

It also projected gas consumption would fall to 82.35 bcfd in 2020 and 78.62 bcfd in 2021, from a record 84.97 bcfd in 2019.

That would be the first annual decline in consumption since 2017 and the first time demand falls for two consecutive years since 2006.

The EIA’s gas supply projection for 2020 in July was lower than its June forecast of 89.65 bcfd, while its latest demand outlook for 2020 was higher than its June forecast of 81.87 bcfd.

The agency forecast U.S. liquefied natural gas exports would reach 5.35 bcfd in 2020 and 7.28 bcfd in 2021, up from a record 4.98 bcfd in 2019. That is lower than its June forecasts of 5.70 bcfd in 2020 and 7.31 bcfd in 2021.

U.S. coal production is expected to fall 29% to 501 million short tons in 2020, which would be its lowest since 1967, before rising to 536 million short tons in 2021 when power plants are expected to burn more coal due to a forecast increase in gas prices, EIA said.

It projected carbon emissions from burning fossil fuels will fall to 4.507 billion tonnes in 2020, the lowest since 1983, from 5.130 billion tonnes in 2019, the lowest since 1992, before rising to 4.775 billion tonnes in 2021 as coal use increases.

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