Lately, we’re reminded on a daily basis that domestic thermal coal / natural gas markets are currently firmly connected via power generation market share dynamics.
2012 is shaping up to be a pivotal year for that dynamic. Weak power demand plus price driven gas market share inroads have the domestic thermal coal market moving firmly into oversupply. Gas is taking power gen market share at a decent clip but until recently not enough to keep pace with supply adds.
We have triangulated on a 2012 coal/gas supply/demand forecast that threads the needle between maximum gas storage (~4.1 Tcf), and the need to work down coal inventories.
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