Jakarta,- Coal prices have surged after collapsing. The price of black sand returned to the psychological level of US$ 140 per tonne along with predictions of an increase in the price of gas which is a substitute for coal and a delay in production increases by OPEC +. both provide positive sentiment towards coal prices which both play a role as energy commodities.

According to Refinitiv data, on Thursday (5/9/2024) the ICE Newscastle benchmark coal price strengthened 0.79% at US$ 140.5 per tonne. The strengthening made coal prices managed to leave the psychological level of US$ 139 per tonne.

The strengthening of coal prices on Thursday was fuelled by predictions that EU gas prices could jump 50% in the event of a strong winter in the European region.

European gas prices jumped 0.72% yesterday to €38 per megawatt-hour (MWH) on supply concerns.

EU gas storage levels have reached 92.5% full but storage levels could quickly drop in the event of a ‘strong winter’ amid ongoing fierce competition from Asia for LNG supplies. Europe is turning to LNG to replace pipeline gas supplies lost after Russia's invasion of Ukraine in 2022.

SEB Bank notes that statistically 20% of winters are milder than normal, 20% are stronger, and the remaining 60% are around the historical average.

As Europe gets colder, this could increase demand for coal as a substitute for soaring gas prices.

Then, good news also came from the world's crude oil as a fuel in coal shipments.

OPEC+ has agreed to postpone its planned oil production hikes for October and November, the producer group said on Thursday after global crude prices hit a nine-month low. However, they can temporarily halt or reverse the increase if needed.

OPEC+'s planned production increase in October is 180,000 barrels per day, a fraction of the 5.86 million barrels per day it is holding back, equivalent to about 5.7% of global demand, to support the market due to uncertainty about demand and rising supply outside the group.

Following the OPEC+ decision, oil prices rose about 0.2% today, Friday (6/9/2024) at 07.00. Coal is a substitute fuel for oil and gas so its price will rise if both commodities strengthen.