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Oil report

UPDATE 1-US power plants to burn 5 pct less coal in '09-EIA

(Adds background, EIA forecast statistics)

NEW YORK, July 7 (Reuters) - U.S. power plants will burn 5.2 percent less coal this year than they did in 2008 due to weak demand and increased use of natural gas, the government’s energy forecasting agency said on Tuesday.

The Energy Information Administration revised downward its forecast for the 2009 coal burn in its monthly outlook. Last month, the EIA said the power sector’s 2009 coal burn would be 4.6 percent lower than last year.

Power plants will burn about 987 million tons of coal this year, the EIA said in its July outlook. Last month it said they would burn 994 million tons. Last year U.S. power plants burned more than 1.04 billion tons of coal.

“The 5.2 percent decline in coal consumption in the electric power sector is the result of lower total electricity generation coupled with projected increases from other generating sources, including natural gas, nuclear, hydroelectric, and wind,” the EIA said in its outlook.

Coal consumption for coke production should fall by 38 percent in 2009 to nearly 14 million tons. The losses in coal use for coke and steam reflect “very weak industrial activity,” the EIA said.

The EIA expected recovery in power demand next year and forecast that power plants in 2010 will burn more than 1 billion tons of coal.

Reporting by Timothy Gardner; Editing by Walter Bagley

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