Wednesday, January 4

Today we saw continued strong performance across our portfolio, and in the market in general. Cloud Peak is back up to an acceptable price, and further increases are indicated this week. After market close we learned that oil inventories will be drawn down this week, creating a very bullish case for energy commodities this week. Since USO did not react to this news, no significant portion of investors have reacted to this news yet so we can expect further gains in CLD tomorrow.

While it is unfortunate that the cold periods in January will not last as long as previously predicted, our position in CLD is based on the inevitable increase in natural gas prices that will follow with steadily gaining crude prices. As this happens plants that had converted to natural gas will convert back – several have begun the process already. According to the EIA coal consumption for generation will be between 5 and 10 million short tons more in 2017 than it has been this year. Based on the 70 million tons of coal produced every year that is between a 7 and 14% growth in demand.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s