RE:RE:RE:U.S. Natural Gas Is Heading For $3 - will AECO suffer too?To add to Yasch's comments:
Europe had a hot summer which drew down their gas stocks. They planned to restock in the fall somewhat, but then the wind stopped blowing. The undersea cable was a factor for the UK but at the same time would have reduced demand in the EU so it was somewhat a nonfactor for the European system as a whole.
While LNG isn't a marginal consumer and plays a limited role in setting US pricing, coal is not. I believe the EIA is way off the mark here in forecasting lower US gas usage for 2022. That may have been true if cheap coal was available, but that is clearly not the case right now.
Europe and Asia are at critical gas stocks and 2023 winter is at risk. You need long term liquefaction facilities to export gas, but only need dry bulk carriers to ship coal...of which there is no limitation. US coal is limited in its ability to raise rates both because they need to deleverage and second no one wants to start a career in Coal.
When global LNG is trading at $300+/boe, US gas is at $30/boe and coal is at $100/boe (4.7bbls in 1 ton of coal equiv)...there is no chance in hell that utilities choose to burn coal over gas. They will export their coal supply and draw on gas. It's not even close to parity in terms of switching cost. Coal will stay well supported as long as Russian coal is off the market and European gas prices don't collapse by 75% (not likely based on 2022 futures)
https://markets.businessinsider.com/commodities/coal-price