U.S. natural gas futures (NG1:COM) plunged to their lowest close in more than 25 years after the government reported a larger than forecast weekly storage build to 120 Bcf and far above the five-year average of 73 Bcf.
July Nymex natural gas, which expires tomorrow, settled -9.5% to $1.44/MMBtu, and the August contract closed -7.9% to $1.53/MMBtu.
The results reflect demand destruction from COVID-19, which has left the world with an excess of the fuel that likely will completely fill storage caverns by the end of the summer season.
The storage increase boosted stockpiles to 3.01 Tcf, 18.3% above the five-year average of 2.546 Tcf for this time of year; by the end of the injection season in October, analysts expect U.S. inventories will reach a record 4.1 Tcf.
Goldman Sachs raised its season storage forecasts and cut their price forecasts for later in 2020 as cancellations of liquefied natural gas cargoes added more gas to U.S. stockpiles than expected.