US industrial gas demand is trending above year-ago levels this month but widening coronavirus-related lockdowns and emerging demand weakness in major consumer sectors are now putting the recovery at risk.
In December, US industrial gas demand has averaged an estimated 24.6 Bcf/d, actually outpacing its 2019 month-to-date average at 24.4 Bcf/d, data compiled by S&P Global Platts Analytics shows.
Over the past several weeks, stay-at-home orders or business closures have been enacted by officials in various states including California, Oregon, Washington, Illinois, Ohio, Michigan and Minnesota. Numerous other states have enacted at least partial restrictions on business activity.
Combined, recent measures could slow the US economy and potentially reduce industrial activity due to specific restrictions, or as a result of reduced demand for industrial end-products.
In the heavily industrialized US Southeast, gas demand from industry has averaged 6.4 Bcf/d this month-to-date – roughly flat compared to 2019. With many of the region’s industrial consumers tied to crude oil and natural gas, though, recent lockdowns could pose an outsized risk in the region heading into the new year.
Oil & gas
In the chemicals sector, recent lockdowns could already be having an impact on gas demand. In December, demand from sampled chemicals industries continues to trail year-ago levels by about 1.7%, according to data compiled by Platts Analytics.
Since late November, gas demand from the petroleum refining sector has actually outpaced its year-ago level as facilities hard hit by this year’s busy hurricane season have continued to restore operations. December to date, demand from sampled refineries has trended about 5% higher compared to December 2019, Platts Analytics data shows.
Refinery utilization is also at its highest since late August, before the flurry of late-summer and autumn storms. In the week ended Nov. 27, refinery utilization averaged over 78% – up about 6 percentage points compared to post-storm lows, data reported by the US Energy Information Administration shows.
The recent, bullish trend in the refining sector could be at risk, though. In the week ended Dec. 4, finished motor-gasoline supplied to the US market fell to average 7.6 million b/d – down sharply compared to November when the industry supplied about 8.2 million b/d on average, EIA data shows.
Gas demand from the metals sector – which is particularly sensitive to headwinds in the broader economy – could also be at risk in the months ahead as virus lockdowns take a toll on economic activity.
After trending close to year-ago levels in October, gas demand from primary metals producers has recently widened its deficit to 2019. In December, demand is now trending about 18% below its year-ago level, data from Platts Analytics shows.