US over-the-counter thermal coal prices closed mixed on Friday as traders digested the most recent weekly natural gas storage data, which propelled natural gas front-month futures to more than a five-week high in the previous session.
The front-month natural gas futures contract edged 2.3 cents lower on Friday, following Thursday's sharp 25.4-cent rally.
"Natural gas prices rallied on the week as the near-term weather forecasts turned warmer, while near-term supply disruptions and a lower-than-expected injection on Thursday also bolstered prices," Barclays Capital analyst Shiyang Wang said in a research note released Friday.
Still, assuming normal weather scenarios, Wang is forecasting an average price of about $4.50/MMBtu for the balance of the summer, as reductions in coal-to-gas displacement and production growth narrow the storage deficit.
UBS analyst William Featherstone said that natural gas has typically lost demand to coal when it exceeds $4.50/MMBtu, but the low natural gas storage exit out of heating season and into injection season will likely require sustained fuel switching from gas to coal throughout the spring and summer, supporting prices above $4.50/MMBtu.
In Friday's US OTC coal trading session, the barged Central Appalachian thermal coal contract accounted for nearly all of the day's volume.
CAPP barge prices rose 15-25 cents/st higher along the 2014-2015 curve, while CAPP rail (CSX) prices fell 15 cents/st along the same forward oints.