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Crude Oil Up, Natural Gas Down: Analyzing the Impact on Coal (Continued from Prior Part) Natural gas prices
After two consecutive weekly gains, natural gas prices fell last week. While prices rose until Thursday, the expectation of moderation in the warmer weather in the East and Northeast more than offset the gains on Friday. The Henry Hub spot price fell to $2.77 per MMBtu (British thermal units in millions) from $2.81 a week earlier.
During the same period, the front month contract prices fell to $2.77 per MMBtu—compared to $2.82 a week earlier.
Why are these indicators important?
The shale gas boom led to a massive rise in production and a fall in natural gas prices. As a result, natural gas became a competing fuel for coal. It ate away market share from coal in electricity generation.
Natural gas prices and coal’s market share in electricity generation are related. When natural gas prices rise, coal gains market share. It becomes more economical to burn coal for power generation. A fall in natural gas prices generally leads to a fall in coal’s market share because natural gas is available at cheaper rates.
Impact on coal and utilities
A fall in natural gas prices is negative for coal producers (KOL) like Alliance Resource Partners (ARLP) and Natural Resource Partners (NRP). Natural gas becomes cheaper as a fuel in electricity generation. For utilities (XLU) like PG&E (PCG) and Southern California Edison (EIX), the impact depends on the level of regulation. If their contracts are strictly on a cost-plus basis—they get a fixed return over and above costs—the impact isn’t significant. For utilities with fixed-price contracts—they get a fixed price irrespective of changes in input costs—the drop in natural gas prices is positive.
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Natural Resource Partners L.P.
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CODE : NRP |
ISIN : US63900P1030 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Natural Resources Partners est une société de production minière basée aux Etats-Unis D'Amerique. Natural Resources Partners détient divers projets d'exploration en USA. Son principal projet en exploration est D.D. SHEPARD en USA. Natural Resources Partners est cotée aux Etats-Unis D'Amerique. Sa capitalisation boursière aujourd'hui est 1,1 milliards US$ (1,0 milliards €). La valeur de son action a atteint son plus bas niveau récent le 24 juillet 2020 à 10,00 US$, et son plus haut niveau récent le 26 avril 2024 à 91,73 US$. Natural Resources Partners possède 12 241 602 actions en circulation. |