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What Impacted the US Coal Market in the Week Ended October 6?

PART:
1 2 3 4 5
Part 2
What Impacted the US Coal Market in the Week Ended October 6? PART 2 OF 5

Natural Gas Prices Dropped during the Week Ended October 6

Natural gas prices

For the week ended October 6, 2017, the Henry Hub natural gas spot price was reported to be $2.87 per MMBtu (million British thermal units). The reading is lower than $3.01 per MMBtu posted in the previous week. On October 6, the November US natural gas futures contract price settled at $2.86 per MMBtu.

October weather in most of the United States is usually mild. According to the National Weather Service, the Western and Southern regions of the US are expected to experience unseasonably warm weather. The Eastern states are expected to face rainstorms this week. On the whole, warmer-than-average weather could be expected for the next few weeks.

Natural Gas Prices Dropped during the Week Ended October 6

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Warm weather typically leads to a decline in demand for natural gas. However, as we read in the previous part of this series, the natural gas supply rose 42.0 Bcf (billion cubic feet) for the week ended September 29, 2017. A drop in demand with an increase in supply is likely to put pressure on natural gas (UNG) prices. 

A drop in price is not a positive shift, which affects natural gas producers like Southwestern Energy (SWN) and Gulfport Energy (GPOR).

Effect on coal producers

When natural gas prices rise, coal becomes a more economical fuel, leading to a boost in coal’s (KOL) market share. Likewise, coal’s market share falls if natural gas prices drop. 

Next, let’s look at the latest crude oil prices.

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