Bloomberg Coal at 28-Month High to Beat Oil, Gas on Floods: Energy Markets

By Dinakar Sethuraman and Ben Sharples

Jan. 13 (Bloomberg) -- Coal for producing power may beat oil and natural gas this year as disruptions from Australia to South Africa drive prices for the fuel to a 28-month high.
   
Thermal coal may climb about 14 percent to $150 a metric ton in coming weeks, while increased stockpiles limit gains for oil and natural gas, Joachim Azria, a New York-based analyst at Credit Suisse Group AG, said in a Jan. 10 report. Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd., said on Jan. 4 coal may advance as much as 15 percent. Prices at the Australian port of Newcastle were at $131.80 a ton on Jan. 7, the highest since September 2008, according to IHS McCloskey data.

"There's definitely more possible upside in the coal market at the moment than there is in the oil market," Ben
Westmore, an energy economist at National Australia Bank Ltd. in Melbourne, said in a Jan. 12 interview.
   
Spot prices at Newcastle, the world's biggest coal-export facility, have jumped 20 percent in less than six weeks, according to Petersfield, England-based McCloskey. The worst floods in Queensland state in 50 years shut mines and closed transport lines, disrupting supplies. Coal shipped via South Africa's Richards Bay, Africa's largest terminal for the fuel, gained about 18 percent. Oil in New York rose 5.5 percent in the
same period, while natural gas added 3.3 percent.
   
"Coal should continue to outperform oil and gas in 2011," said Azria, who estimates as much as 2 million tons of thermal supplies have been disrupted by the Australian floods.