| Natural Gas Storage Tops 5-Year Average: Will It Impact Coal? | |
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Crude Oil Up, Natural Gas Down: Analyzing the Impact on Coal Natural gas inventory
The EIA publishes a weekly natural gas inventory and withdrawal report every Thursday for the week before. The latest report is for the week ending June 19.
Throughout the year, natural gas is stored underground in order to save the fuel for peak demand during the winter. For the week ending June 19, the inventory came in at 2,508 Bcf (billion cubic feet)—compared to 2,433 Bcf a week earlier. This implies an addition of 75 Bcf during the week.
The inventory figure for the week was also higher than 1,813 Bcf the year before and the five-year average of 2,473 Bcf. However, the inventory fell just short of Wall Street analysts’ expectation of 2,511 Bcf.
Why is this report important?
Commodity prices are a function of demand and supply. If demand rise while supply remains constant, prices rise because more customers are chasing each unit of a commodity. In contrast, if supply rises for a given level of demand, prices fall because the commodity is available in abundance. So, natural gas inventory data are useful to get a sense of natural gas prices.
Impact on coal
The natural gas inventory has risen over the past few weeks since the injection season has started. If the inventory is higher than expected, it indicates higher-than-expected supply. This pressures natural gas prices. Weak natural gas prices are negative for thermal coal. Utilities (XLU) burn more natural gas when prices are low. This takes away the market share in electricity generation from coal.
The fall in natural gas prices over the last few months has hurt coal producers (KOL), especially those with operations in the East and Midwest—including Alliance Resource Partners (ARLP), Natural Resource Partners (NRP), and Peabody Energy (BTU).
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Natural Resource Partners L.P.
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CODE : NRP |
ISIN : US63900P1030 |
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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. |