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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Rig Counts May See Uptick As Oil Surpasses $40

May Natural Gas

While the world was watching the volatile price action in crude oil futures this week, May Natural Gas futures were quietly rising back to nearly $2.00. Now we know that this first rally from any major low is just short-covering and profit-taking, but it’s a start especially in a market that has been subject to a boatload of negative news.

(Click to enlarge)

One key piece of news that broke this week that could be supporting higher prices is that natural gas may be on pace to overtake coal as the most popular fuel for electricity generation.

The U.S. Energy Information Administration believes natural gas will provide 33% of generation in 2016, while coal’s share will likely fall to 32 percent. This may be like the moment automobile sales exceeded horse carriage sales, or cell phone usage passed land-line usage. Once it makes the move, it never looks back. That would be the first time that natural gas beats coal on an annual basis.

The EIA also said natural gas and coal each contributed one-third of all electricity in 2015. This is significant because it represents a strong trend since coal accounted for half of all U.S. electricity generation between 2000 and 2008.

Helping to support the rise in the use of natural gas is its relatively low price. This can be attributed to the U.S. fracking boom. Additionally, the Obama administration’s efforts to implement new regulations on coal-fired power plants…

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