Declining coal stockpiles to boost gas demand: Jefferies analyst
US natural gas demand and prices will get a boost from declining coal stockpiles, according to a recent Jefferies & Co report. Coal inventories are being depleted more quickly than they can be replenished, which means some electric utilities increasingly will rely on underutilized gas-fired generators, Jefferies analyst Frank Bracken said in the report. Combined-cycle power plants that were built over the last five years and so far have proven unprofitable due to soaring gas prices "will be put to work, and that will create an incremental demand for gas," Bracken said. As a result, the firm raised its estimate of 2005 gas prices to a "band" of $5 to $7/MMBtu from its previous outlook of $4 to $6/MMBtu. Historically, coal supplies have kept pace with power-generation demand, but going forward "the outlook takes on a more dire appearance," Bracken said.
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