| Power demand to push US coal prices up | |
| Prices paid by the
electric power sector for US coal are projected to rise 5.5% in 2006 as
generator demand for the fuel increases in response to high oil and natural
gas prices, the Energy Information Administration said Jan. 10 n its
Short-Term Energy Outlook for January. The agency said is expects coal prices will rise by an additional 2.6% in 2007, increasing from $1.54/MMBtu in 2005 to $1.66/MMBtu in 2007. The January forecast marks a slight increase over what the EIA projected in its short-term outlook in December, when it estimated that coal prices for the power sector would increase 5% in 2006. The agency projected in its latest report that electric power sector demand for coal will rise 2.2% in 2006 and increase by another 1.2% in 2007. Coal production is projected to grow by 3.9% in 2006 and remain at the 2006 level in 2007. In addition, EIA said weather conditions and continuing economic growth are expected to increase power demand by 1.3% in 2006 and by another 1.6% in 2007. The January projection is below the 1.7% increase in demand EIA projected for 2006 in its December outlook. As far as natural gas is concerned, EIA said a 1.4% annual increase in total domestic energy demand in 2006 and 2007 will contribute to continued market tightness and projected high prices. EIA again raised its projected 2006 Henry Hub spot natural gas price, now putting it at $9.80/Mcf, up from the $9.30/Mcf estimate of one month earlier. Average wellhead prices for the year are expected to be $8.98/Mcf, up from the $8.42/Mcf estimate in the November outlook. EIA put 2006 gas demand at 22.47 Tcf, up slightly from 22.35 Tcf last year. Residential demand is projected to increase by about 0.8% in both 2006 and 2007, while industrial demand is estimated to grow by 3.5% in 2006 and 1.3% in 2007. Demand for power production is seen falling by 4.7% this year, based on an assumption of normal summer weather, before increasing 2.4% in 2007. On Dec. 30, working gas in storage stood at an estimated 2.64 Tcf, EIA said. That was about 79 Bcf below levels of a year ago, but still 168 Bcf above the five-year average. Gas storage levels will likely match the five-year average for the next two years, EIA added. Copyright © 2005 - Platts Please visit: www.platts.com Their coverage of energy matters is extensive!!. |