Natural Gas Inventory Fell: Could Coal Benefit?

Natural gas inventory

Natural gas inventory is a significant indicator of natural gas prices. In this series, we’ll be examining the latest results of the natural gas stockpile report published by the EIA (U.S. Energy Information Administration) and how it influenced natural gas and coal prices.

According to EIA estimates, natural gas inventory for the week ended November 24, 2017, was 3,693 Bcf (billion cubic feet), which is 0.9% lower than 3,726 Bcf in the previous week. Natural gas inventory declined 33 Bcf during the November 17–24, 2017, week, which was marginally lower than 37 Bcf expected by Wall Street analysts.

Natural Gas Inventory Fell: Could Coal Benefit?
The stockpile fell 7.7% on a YoY (year-over-year) basis. It was 4,002 Bcf during the comparable week in 2016. At 107 Bcf below the 3,800 Bcf five-year average, the stockpile for the week that ended November 24 is within the five-year historical range.

Impact

Natural gas consumption in the United States has risen due to the arrival of winter. Rising demand for the fuel and the fall in inventory levels may pressure natural gas prices.

Utilities such as Southern Company (SO) and Duke Energy (DUK) may favor coal over natural gas if the price of natural gas rises. Coal (KOL) companies Alliance Resource Partners (ARLP), Cloud Peak Energy (CLD), and Westmoreland Coal (WLB) could profit from it.

Next, let’s see if high demand and the limited supply of natural gas have helped natural gas prices.