Cheap natural gas has previously weighed on coal demand as electric utilities have switched to that cleaner-burning fuel over coal. The ongoing shale oil boom has pressured natural gas prices and made natgas a cheap alternative to coal. Additionally, new environmental regulations have forced coal-fired power plants to close, and many are being replaced with natural gas.

KOL is up more than 5% since the start of this year and there are catalysts looming that could send the coal ETF on another run higher.

“No shortage of catalysts coming the next few months. We think the first half of 2017 is gearing up to be very eventful in the coal space. We expect Peabody Energy, Contura Energy and Warrior Met Coal to come public and are watching others who may follow suit. Fourth-quarter earnings season will give us the first look into how the companies have done on capitalizing on the rising price environment in coking,” according to the MKM note seen in Barron’s.

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