Declining coal stockpiles to boost gas demand: Jefferies analyst

Washington (Platts)--22Nov2004

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.

Copyright 2004 - Platts

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