An American report revealed that the main activities that largely consume natural gas are the petrochemical industries and petroleum refining, and the chemical industry is the largest consumer of natural gas. Apart from its use for electricity and heating, natural gas is also used as feedstocks for the production of three basic products for the economy, which are fertilizers, methanol and hydrogen, according to the report. The daily report of Energy Outlook Advisors (EOA), based in the United States of America.
The production of methanol, which is necessary to produce other products, has increased significantly in recent years, which has led to a growth in the industrial sector’s demand for natural gas. In general, the demand for natural gas in the industrial sector is seasonal. For example, demand peaks in winter due to the need Incremental heating, however, seasonal changes in demand in the industrial sector are lower than in other sectors.
Although Covid-related lockdowns in 2020 led to declines, demand for natural gas subsequently rebounded and continued to increase in the following years, and in early 2023 demand declined as predicted by various groups, including the Information Administration. US energy, but in general, the industrial sector’s demand for natural gas has been steadily increasing since 2009 – when the financial crisis ended. Most of the growth was driven by methanol production, and oil refineries switching to natural gas between 2015 and 2021.
Growth in demand for natural gas in the US industrial sector is important to support prices given that this sector consumes about a quarter of all gas consumption in the US. It runs out of natural gas and prices will maintain an upward trend. But after that, many factories shut down and moved their operations to China and other regions.
According to the Energy Information Administration, industrial demand for natural gas grew at a rate of 2% in 2021 and 1.9% in 2022 which is lower than expected. For 2023, management expects a decline of 4%, and the decline in the first two months of this year was slightly higher due to lower manufacturing activities and flat fertilizer production.
The problem is that if global demand for LNG increases and LNG prices hit new records, this will increase the possibility of a rise in natural gas, which in turn will lead to lower industrial demand. As LNG prices rise, there will be not only competition between Asia and Europe for natural gas, but also competition between the US industrial sector’s demand for domestic gas and the international demand for US LNG.
Relatedly, higher natural gas prices will increase refining costs and reduce margins while utilities will revert to coal. The end result is higher costs, inflation, lower economic activities, and increased greenhouse gas emissions.
In its monthly report released Thursday, OPEC kept its 2023 global oil demand growth estimate virtually unchanged at 2.3 million barrels per day, with minor adjustments due to improvements in the Chinese economy.
“Slight adjustments were made to the upside due to the better-than-expected performance in the Chinese economy, while other regions are expected to witness a slight decline due to economic challenges that are likely to affect oil demand,” OPEC said in its report.
Meanwhile, non-OPEC liquids production growth was kept unchanged from the April assessment, at 1.4 million bpd year on year, according to the report, noting that the United States, Norway, Kazakhstan, Canada and Guyana are the “major drivers of liquids supply,” while It is mainly expected that supply drops will be recorded in sanctioned Russia.
“There are still doubts related primarily to the possibility of US shale oil production and unplanned field maintenance in 2023,” OPEC said in its report. Regarding the crude oil production of the 13 OPEC countries’ producers in April, the report said it fell by 191 thousand barrels per day to an average of 28.60 million barrels per day, based on secondary sources.
Meanwhile, a recent survey by Standard & Poor’s Global showed that OPEC-13 pumped 28.60 million bpd in April, down 370,000 bpd compared to March, while non-OPEC production fell by 10,000 bpd in April. Today to 13.39 million barrels per day. The decline is attributed to the continued suspension of crude oil exports from northern Iraq through the Turkish port of Ceyhan, and the oil outage in Nigeria.
Iraqi Oil Minister Hayan Abdul Ghani said Iraq does not expect OPEC+ to make further cuts in oil production at its next meeting in June, in the first indication from an OPEC minister about a possible decision as oil prices drop. Abdulghani said that Iraq is committed to voluntary cuts in oil production that began in May and will continue until the end of 2023, and indicated that Iraq was not asked to make any additional such cuts before the OPEC + meeting on June 4.
OPEC and allies led by Russia, via OPEC+, agreed to cut production in late 2022 to support the market as the economic outlook worsened, weighing on prices. Then, in a surprise move in early April, Saudi Arabia and other OPEC+ members announced further oil production cuts of about 1.2 million barrels per day.
The announcement helped send oil prices sharply higher, but those gains have since faded as fears of a global economic slowdown spread. OPEC+ members are due to meet in Vienna on June 4 to decide on the next course of action. Abdul Ghani said, “The second cut was voluntary and helped us a lot in stabilizing the market and raising prices.”
The cuts in April punished oil short sellers, or those who bet on lower oil prices, and back in 2020, Saudi Energy Minister Prince Abdulaziz bin Salman warned traders against betting heavily on the oil market, promising that those who gamble on the price of oil will be Hell.
Iraq said it would cut 211,000 bpd starting in May as part of the voluntary cuts. While Turkey stopped 450,000 barrels per day of its northern exports via the Iraq-Turkish pipeline on March 25 after arbitration ordered Ankara to pay Baghdad $1.5 billion in compensation for unauthorized exports by the KRG between 2014 and 2018.
It was not clear when the flows would resume, but Ghani said on Friday that Baghdad had not yet heard about a request by the Turkish state energy company to resume exports.