| Natural Gas Inventory High Enough to Pressure Coal | |
| | |
|
Can Coal Benefit from mid-April Boost to Natural Gas Prices? (Part 1 of 4) April 10 natural gas inventory up slightly
The EIA (U.S. Energy Information Administration) publishes a weekly natural gas inventory and withdrawal report every Thursday for the preceding week. The latest report is for the week ending April 10.
Throughout the year, natural gas is stored underground in order to save the fuel for peak demand during the winter. In the week ending April 10, inventory came in at 1,539 Bcf (billion cubic feet) compared to 1,476 Bcf a week earlier. It was marginally higher than Wall Street analysts’ expectation of 1,529 Bcf.
April 10 inventory was lower than the five-year average of 1,693 Bcf. However, it remained higher than last year’s 850 Bcf. A severe winter in 2014 caused a rapid inventory drawdown.
Why is inventory important?
Commodity prices are a function of demand and supply. If demand increases while supply remains constant, the prices increase because more customers are chasing each unit of the commodity. In contrast, if supply increases for a given level of demand, prices drop because the commodity is available in abundance. So, natural gas inventory data are a useful way to get a sense of natural gas prices in the short term.
Impact on coal
A rise in natural gas inventory is a good indication that winter is over. If inventory is higher than expected, then so is expected supply. This puts pressure on natural gas prices, which is bad for thermal coal.
The falling natural gas prices these last few months has hurt coal producers (KOL), especially the ones with operations in the East and the Midwest, including Alliance Resource Partners (ANRLP), Natural Resource Partners (NRP), and Peabody Energy (BTU). Utilities (XLU) burn more natural gas when prices are low, biting into coal’s share of the electricity generation market.
Continue to Part 2 Browse this series on Market Realist:
|
|
|
Alpha Natural Resources Inc.
|
|
|
CODE : ANR |
ISIN : US02076X1028 |
|
| |
ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Alpha Natural Res. est une société de production minière basée aux Etats-Unis D'Amerique. Alpha Natural Res. est cotée aux Etats-Unis D'Amerique et en Allemagne. Sa capitalisation boursière aujourd'hui est 580,6 millions US$ (502,5 millions €). La valeur de son action a atteint son plus haut niveau récent le 25 juillet 2008 à 99,92 US$, et son plus bas niveau récent le 19 février 2021 à 0,02 US$. Alpha Natural Res. possède 49 410 000 actions en circulation. |