FINWIRES · TerminalLIVE
FINWIRES

US Industrial Natural Gas Demand Seen Reaching Record Highs Through 2027, EIA Says

By

US industrial natural gas consumption is expected to reach record highs through 2027 as manufacturing activity edges higher, the US Energy Information Administration said Friday.

In its latest Short-Term Energy Outlook, EIA projected industrial natural gas demand to average 23.9 billion cubic feet per day in 2026, and rise to 24.3 Bcf/d in 2027, following a record 23.6 Bcf/d in 2025. That compares with the previous record of 23.4 Bcf/d set in 2023.

The agency said demand growth is expected to remain modest as gains in industrial activity are partially offset by continued efficiency improvements that reduce the amount of natural gas required per unit of output.

Much of the demand is expected to come from the chemicals sector and other manufacturing industries. The chemicals subsector is the largest industrial consumer of natural gas, using the fuel for heating,

electricity generation and as a feedstock for products including methanol, fertilizer and hydrogen.

The EIA said industrial gas demand follows a seasonal pattern, with consumption peaking in winter months due to higher heating requirements at industrial facilities.

Industrial consumption averaged 26.1 Bcf/d in January 2026 and is forecast to rise to 26.7 Bcf/d in January 2027. Demand typically falls during the summer, with June expected to post the lowest monthly averages in both 2026 and 2027 at roughly 22.6 Bcf/d.

Industrial natural gas use has remained relatively flat since 2018, apart from the sharp decline during the Covid-19 pandemic in 2020 and the subsequent recovery in 2021 and 2022.

The EIA said relatively low US natural gas prices during the mid-2010s encouraged expansion in energy-intensive industries such as petrochemicals, ammonia production and refining, particularly along the Gulf Coast, lifting the sector's baseline level of gas consumption.

At the same time, manufacturers have increasingly adopted more efficient process heaters and heat-recovery technologies, slowing growth in fuel demand.

The EIA forecasts the natural gas-weighted manufacturing index will rise 1.5% in 2026 and 0.7% in 2027, supporting further increases in industrial gas consumption.

Related Articles

Commodities

Energy Supply Fears Persist but Catastrophe not Immediate Despite Hormuz Uncertainty, Sparta Says

Uncertainty over the trajectory of the Iran war and the risk of a prolonged closure of the vital Strait of Hormuz may have rightly stoked concerns of an impending energy supply catastrophe, but the immediate situation may not be as bad as feared, according to Sparta Commodities Head of Research Neil Crosby."I'll say that I'm less convinced about the urgency of the situation than I was one month ago," Crosby said in an interview with.While broadly agreeing with the narrative of a disastrous crude oil supply outlook, Crosby said several factors, including a decline in Chinese crude imports and the emergence of alternative supply routes and solutions, have introduced a degree of uncertainty to the situation."If the Chinese do import at close to normal levels, then you're going to see US, European, and Japanese crude stocks run low. So the math makes sense," Crosby said."If the Chinese draw very heavily on their crude stocks and leave crude for the rest of the world, so to speak, then the rest of Asia implicitly can run at a slightly higher rate and the oil shortage is delayed for the rest of Asia. So that's the uncertainty I have here."China recorded a 20% year-on-year decline in its oil imports in April, marking a near four-year low, amid a continued disruption in supplies due to the effective closure of the vital Strait of Hormuz waterway, Reuters reported last week, citing customs data.The world's largest oil importer secured 38.5 million metric tons of crude oil last month, the lowest since July 2022, the report said. The country relies on the Middle East for nearly half of its crude oil imports.China's seaborne crude imports for April stood at 8.03 million barrels per day, which is again the lowest since July 2022, the report said, citing Kpler data.Among Asian countries, Japan and South Korea have increased their purchases of West Texas Intermediate crude inventories from the US, which they are blending with strategic reserve barrels to maintain high refining run rates, Crosby said.Meanwhile, oil exports from the Yanbu port in Saudi Arabia have shown a sharp rise, with Wood Mackenzie analysts estimating shipments from the facility averaging 4 million barrels per day in the first week of May, compared with about 735,000 b/d before the Iran war."Physical crude has gotten very oddly weak as a result of all these factors. That doesn't mean we don't have a problem, like basically what we're doing is drawing down reserves in China, the US, in Asia, but it does mean that the sort of immediate shock on the physical crude market is over for now," Crosby said.Draws from the strategic petroleum reserves, a rise in supplies from the Yanbu facility and the UAE, Chinese import reduction, and a potential increase in output from South American countries like Brazil and Venezuela over the next six months, along with some form of inflationary demand loss could all help soften the impact of the Middle East supply crisis, Crosby said."It's all about time horizons as well. If you say to me that Hormuz is going to be closed for the next two years, that's a disaster. If you say it's going to be closed for three months and then reopened, we don't have a disaster. But obviously we have some macroeconomic headwinds," Crosby added.If the Iran conflict is resolved by this summer, the floor price for crude oil will be between $80 and $90 due to demand from countries like the US and China and the International Energy Agency members to refill their strategic emergency reserves and the energy infrastructure damage in the Middle East."I expect SPR will be drawn down strongly as long as the Strait of Hormuz remains closed. Later, upon re-opening, there will be forward demand to refill. This I think will be done slowly and only at appropriate prices," he said.A potential threat to the physical market is the rising risk of an unofficial ban on exports by the US due to a sharp spike in gasoline and distillates, and low inventories of diesel and jet fuel."Both fuels are tight. US diesel stocks are already very low. Once US exports start to price out of the market and I think that will be soon then things get tighter in Europe and Asia. Jet we saw a big swing in yields; so the supply crunch wont happen in May and maybe not June. But July might be a different story," Crosby said.The Middle East crisis could result in a significant windfall for all the major unblocked oil producers, with Russia also likely to emerge as a beneficiary. Meanwhile, countries with weaker purchasing power and large net import needs, especially the non-OECD nations in Asia, excluding China, are likely to face the brunt of the crisis, Crosby said.

Commodities

US Awards $94 Million to Speed Deployment of Small Nuclear Reactors

The US has awarded more than $94 million to eight companies to speed the deployment of small modular nuclear reactors, as the Trump administration pushes to expand domestic energy production, the Department of Energy said on Thursday.The funding will support near-term deployment of advanced light-water small modular reactors, or SMRs, by addressing hurdles in licensing, supply chains, and site preparation.The Department said the projects are aimed at strengthening the US nuclear supply chain, supporting the development of Gen III+ SMR order books, and advancing President Trump's plans to boost nuclear energy."Advanced light-water SMRs will give our nation the reliable, round-the-clock power we need to fuel the President's manufacturing boom, support data centers and AI growth, and reinforce a stronger, more secure electric grid," Energy Secretary Chris Wright said.The awards are part of a broader $900 million federal initiative launched in March 2025 to de-risk deployment of Generation III+ SMRs, which are viewed by policymakers and utilities as a scalable source of carbon-free baseload power.The Trump administration previously allocated $800 million under the program to projects backed by the Tennessee Valley Authority and Holtec International in Tennessee and Michigan.The latest recipients include Constellation Energy, which received about $17.3 million to pursue an early site permit from the US Nuclear Regulatory Commission for a potential SMR site in New York, and Nebraska Public Power District, which was awarded about $27.9 million for a similar project in Nebraska.The largest manufacturing award went to BWX Technologies, which secured over $21 million to expand production capabilities at its Mount Vernon, Indiana, facility for reactor pressure vessels and other large nuclear components.Other recipients included Framatome, which will expand fuel fabrication capacity in Washington state, and Global Nuclear Fuel, which plans to add a second fuel rod production line in North Carolina.The DOE said awards also support domestic heavy forging and steel manufacturing capacity, with funding directed to Scot Forge and American Forgemasters Company for equipment upgrades tied to large SMR components.

Commodities

British Gas Faces $26.7 Million Redress Payment Over Vulnerable Customer Failures

British Gas agreed to pay 20 million British pounds ($26.7 million) after Ofgem found the supplier had wrongly installed prepayment meters for vulnerable customers on Friday.Ofgem found British Gas failed to meet supplier standards aimed at protecting vulnerable customers during the investigation, it said.Customers affected between 2018 and 2021 will receive compensation from British Gas, in addition to the payments the company already made in 2022 and 2023.Under a separate plan agreed with Ofgem, British Gas will cancel up to 70 million British pounds of debt owed by vulnerable energy customers, according to Ofgem.The company will also continue delivering the remaining part of its 22.4 million British pound support package created in 2023 for prepayment meter customers.To improve future customer treatment, British Gas plans to launch a new Vulnerable Customers Debt Advisory Panel focused on debt support for vulnerable households, Ofgem said.During one of its largest investigations, Ofgem reviewed five years of British Gas policies, thousands of customer cases, and complaints gathered from Citizens Advice and the Energy Ombudsman linked to prepayment meter installations.After suspending forced prepayment meter installations in February 2023, British Gas strengthened oversight processes and added new customer protection measures.Ofgem said earlier company reviews in 2018 and 2021 had already identified weaknesses, but British Gas failed to maintain long-term improvements.Chief Executive Tim Jarvis said suppliers should use warrant-led prepayment meter installations only as a final option during debt recovery efforts.Separately, Ofgem said eight energy suppliers provided a combined 73.6 million British pounds in compensation, debt relief and hardship payments after a wider sector review.