The crisis in eastern Ukraine has compelled many European nations and the US to impose far reaching sanctions against Russia, which is a leading supplier of natural gas to Europe. In economic perspective, this could result in a big boost to the US coal exports. This would be more so if President Vladimir Putin cuts its natural gas supply to Europe. Peabody Energy Corporation (NYSE:BTU), CONSOL Energy Inc. (NYSE:CNX) and Alpha Natural Resources, Inc. (NYSE:ANR) are some of the US stocks which have potential to take advantage of Russian Political Crisis.
The leading US coal companies have been facing a decline in the local consumption, forcing them to seek more international relations with coal consuming nations. Peabody Energy Corporation (NYSE:BTU), the biggest producer of coal in the US has experienced more than 27% decline since March, 2009. Alpha Natural Resources, Inc. (NYSE:ANR), one of the leading stocks, has also coiled 45%, according to Daily News. CONSOL Energy Inc. (NYSE:CNX), which is more diversified, is the only stock that has gained a solid figure this year.
However, many economists are foreseeing a possible increase in exports based on the Ukraine situation. The three companies, Peabody Energy Corporation (NYSE:BTU), CONSOL Energy Inc. (NYSE:CNX), and Alpha Natural Resources, Inc. (NYSE:ANR), are expected to take advantage of the possible situation in Europe to increase their supply to the continent. The focus on increasing coal exports is as a result of domestic policies, renewable power technologies, and heightened competition in the natural gas market. These factors led to the lowest coal production levels in 2013, according to Energy Info Administration.
Reuters, in an article published on Friday, said that US coal exports are likely to increase as a result of the Ukraine-Russia conflict.
“Export demand will certainly increase, with the situation in Russia and Ukraine having a big impact on Europe with respect to natural gas,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust in Bryn Mawr, Pennsylvania. “In the short term, there’s no question that a rise in export demand will be helpful to coal stocks.”
A possible change in policies, both in European countries and Russia, are highly likely to impact positively on US energy market, and the leading companies are already salivating for it.
This article has been written by Victor Ochieng.