Traders sweating out the warm winter and wondering how they’regoing to get rid of surplus storage can take heart from a newanalysts report that sees 27,000 MW of natural gas-fired powergeneration capacity being added in the next 12 months.

“This should further translate into an increase in natural gasconsumption of 1.5 Bcf/d potentially, during those hot summer dayswhen gas-fired peaking units are running full out for 24 hours aday, seven days a week in an effort to keep pace with airconditioning demand,” says Raymond James Energy of St. Petersburg,FL.

The group notes that while more conservative estimates show anannual electric capacity growth rate of 1.1%, Raymond James Energyis predicting a 2% growth rate. This is based on the severe dropin power capacity additions over the last 15 years, at the sametime demand has increased to the point where “we are well belowwhat we consider to be the comfort zone for electric capacitymargins.”

What all this means is that despite the warm winter “theunderlying bullish fundamentals for natural gas, excluding weather,remain intact with evidence of tightening supply and demandbecoming more and more evident.” Raymond James Energy says it ismaintaining a composite annual price forecast of $2.80/MMBtu for2000.

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