Natural Gas Undercut in Late Day Trading (UNG)
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After driving higher all day, the price of natural gas futures and the United States Natural Gas ETF (NYSE: UNG) got hammered in late trading on Wednesday, with UNG settling lower by 0.78 percent. Bears stepped in on Natural gas at just under $3.00, while bulls booked profits, and the price dropped sharply to $2.77 per million British thermal unit.
Speculation in Natural gas has gotten wild this month as government reports showed U.S. power plants produced the same amount of electricity from natural gas and coal for the first time in April as low gas prices boosted demand.
However, it should be stressed that natural gas and coal prices are interrelated, and power plant switching reverses as the price of natural gas increases. In other words, depressed coal prices will keep a lid on natural gas prices and vice versa.
The spot price for Central Appalachia coal closed today at $55.38 per ton, according to Bloomberg data. They averaged $56.10 per ton for the week ending June 22nd, says to data from the EIA.
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Speculation in Natural gas has gotten wild this month as government reports showed U.S. power plants produced the same amount of electricity from natural gas and coal for the first time in April as low gas prices boosted demand.
However, it should be stressed that natural gas and coal prices are interrelated, and power plant switching reverses as the price of natural gas increases. In other words, depressed coal prices will keep a lid on natural gas prices and vice versa.
The spot price for Central Appalachia coal closed today at $55.38 per ton, according to Bloomberg data. They averaged $56.10 per ton for the week ending June 22nd, says to data from the EIA.
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