Natural gas prices are down to a territory the industry hasn’t seen since 1995.
Natural gas futures were down 7.2% in Thursday’s trading, dropping to a 25 year low at $1.48 per million British thermal units. The last time natural gas closed below $1.50 was in August 1995, when it settled at $1.47. The lowest-ever price for natural gas is $1.05, which it hit in 1992.
Thursday’s drop represents the fourth consecutive negative day for natural gas, which settled on Wednesday just under $1.60.
The Energy Information Administration reported that the U.S. added 120 billion cubic feet of gas into storage in the most recent week. S&P Global Platts had projected a 107 billion cubic foot increase. Inventories are now just over 3 trillion cubic feet, which is 739 billion cubic feet above a year ago.
There has been a supply glut of natural gas for the last few years as increased oil drilling in the U.S. has produced associated natural gas alongside liquids. In some areas, there is so much gas that producers have burned it off rather than even trying to sell it.
That oversupply has hurt the price of gas, as has a slowdown in gas use because of the Covid-19 crisis. But the economic impacts of Covid-19 could actually benefit natural gas in the longer run, if enough oil producers curb production and thus reduce all the associated gas they have been pumping out. Some analysts had even predicted that gas would trade over $3 by the end of the year. But futures expiring in December now trade at $2.65.