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The US Coal Market and What's Impacting It

PART:
1 2 3 4 5
Part 2
The US Coal Market and What's Impacting It PART 2 OF 5

Is Weather Affecting Natural Gas Prices?

Natural gas prices

Henry Hub benchmark natural gas prices came in at $3.01 per MMBtu (million British thermal unit) for the week ended September 29, 2017. The price during the previous week was $3.11 per MMBtu. On September 27, 2017, the November natural gas futures contract price settled at $3.06 per MMBtu.

Is Weather Affecting Natural Gas Prices?

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Generally, the weather during October in major regions of the United States is mild. According to the National Weather Service, the Southern US states could see heavy rains this week. The Eastern part of United States is also expected to have rainstorms. Heavy rainfall in these regions may lead to cool temperatures. The nation’s Western states are the only regions that are expected to experience warm weather. On the whole, mild weather could be expected for the next few weeks.

Mild weather may result in a lower demand for natural gas. However, in the previous part, we saw that the natural gas supply rose 58.0 Bcf (billion cubic feet) for the week ended September 22, 2017. Lower demand with more supply may put pressure on natural gas (UNG) prices. A fall in prices negatively affects natural gas producers such as Gulfport Energy (GPOR) and Newfield Exploration (NFX).

Effect on coal producers

Increasing natural gas prices make coal the more economical fuel of the two. It helps improve the market share of coal (KOL). Likewise, a fall in natural gas prices generally results in a decrease in coal’s market share.

For coal producers such as Cloud Peak Energy (CLD) and Arch Coal (ARCH), rising natural gas prices are a positive event. It helps increase their margins.

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