On October 11, natural gas futures hit a new high for 2012. Pushing through $3.60 per million BTU, Chesapeake Energy (NYSE:CHK) closed up 4.07 percent, EnCana (NYSE:ECA) closed up 2.96 percent, and Devon Energy (NYSE:DVN) closed up 1.87 percent. Prices are up as a government study shows a smaller than expected increase in inventories. Many companies had shifted away from natural gas in favor of more lucrative oil exploration and production recently because prices were previously so low.
According to Barron’s, commodity strategists at Morgan Stanley wrote that: “Despite a strong rally in recent weeks, we see further upside potential, with prices potentially touching $5/mmBtu in 1Q13. Demand remains elevated, and supply should be slow to respond to improved economic lowing to logistical challenges, more attractive oil economics, and higher break-even costs outside the Marcellus.”
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Having had a rough year to date, coal stocks are once again popping all over the place. Higher gas prices make coal more competitive, but analysts at Dahlman & Rose also predict that China may be increasing its demand for the fuel in the future. Arch Coal (NYSE:ACI) closed up 15.74 percent, Alpha Natural Resources (NYSE:ANR) closed up 16.96 percent, and James River Coal Company (NASDAQ:JRCC) closed up 18.35 percent, among others making huge gains.