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.
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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.
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.