June 24, 2016: Natural Gas Prices Have Catapulted Well Above Prices For Coal On A Cost-Per-MMBtu Basis -- RBN Energy

I don't plan to look at the market for a couple of days. Okay, I might take a peek now and then -- especially to see what happens to TSLA, but not much else, until the dust settles. [TSLA continues to drop; pre-market down another $6, and now below $190.]

Natural gas: from a SeekingAlpha contributor -- there's go the surplus -- see RBN note below --

• Injection of +62 Bcf.
• Injection came in below 5-year and last year figures.
• Surplus reduced.

Active rigs:

	6/24/2016	06/24/2015	06/24/2014	06/24/2013	06/24/2012
Active Rigs	30	77	194	185	210

RBN Energy: the natural gas rally, coal-gas competition, and power burn.

Over the past 20-some days, U.S. natural gas prices have gone from being the lowest in more than a decade to very close to last year’s levels.

The July 2016 CME/NYMEX Henry Hub natural gas futures contract on Thursday (June 23) settled at $2.698/MMBtu, up about 70 cents (36%) from where the June contract expired ($1.963/MMBtu on May 26) and also up nearly 50 cents (23%) from where the July contract started as prompt month on May 27 (at $2.169).

Market buying to unwind short positions initially kick-started the rally, but since then hot weather and a boost in power demand has kept the rally going. National average temperatures have averaged nearly 8 degrees (Fahrenheit, or F) higher in June to date versus May, and in the past week they’ve climbed above the peak summer levels normally not seen until mid- to late-July.

Gas consumption on a temperature-adjusted basis also soared in the first half of June, led by power burn (gas use for power generation).

The combination of hot weather and higher gas usage per degree of demand has been practically made-to-order for the oversupplied gas market, and has led to record power burn in June to date. But higher prices have the potential for bearish consequences—the recent gains have catapulted natural gas prices well above prices for coal on a cost-per-MMBtu basis—making the latter fuel more economically competitive in the power generation sector.

That’s welcome news for coal producers, but what will it do to natural gas demand and in turn gas prices? Today, we look at the shift in the coal-gas price relationship and the potential impact to power burn and the gas market.