BT Alex. Brown analyst Adam Sieminski said he expects U.S. gasprices to average $2.10/MMBtu this year, which is up 15 cents fromhis previous forecast of $1.95/MMBtu, because of rising demand,declining wellhead deliverability and the falling storage surpluscompared to last year. Sieminski said the tightness in marketfundamentals will peak this winter and carry strong prices throughnext year. He raised his forecast for prices in 2000 to $2.40 froma previous estimate of $2.20.

“The decline in the gas rig count is accelerating a drop inproduction, while demand has remained relatively strong with theresult that the excess of gas in storage built up during the warmwinter of 1998-99 is rapidly dwindling,” the BT Alex. Brown reportnoted. “The normal season weakness in prices during the summermonths may fail to appear in view of the implications for storage.”

Sieminski also raised his forecast for WTI oil prices to $16.50from $14.50 and said his $17/bbl forecast for 2000 looksconservative. As a result of the new price estimates, he raised theearnings forecast for a group of seven major producers to anaverage of 10% growth in 1999 compared to 1998. His previousforecast excluding Atlantic Richfield was for a 9% decline inearnings.

ARCO earnings per share are now forecast at $3.27 compared witha prior estimate of $3.20. Chevron Corp. is seen earning $3.70,compared to $3.60. Conoco is expected to earn $1.50/share, ratherthan $1.40. Exxon is expected to earn $2.95, compared to $2.90.Mobil is seen earning $3.65, compared to $3.60. Phillips isforecast to earning $2.30/share, compared to $2.10, and Texaco isnow expected to bring in $2.80 per share in 1999, compared to aprevious estimate of $2.60.

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