WSI Energycast Outlook Calls for Cold Start to Winter in Northeast

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WSI expects the upcoming three-month period to average warmer-than-normal across the eastern half of the US and the Southwest, with below-normal temperatures confined to the northwestern quarter of the country.

WSI Corporation issued the seasonal outlook for the upcoming three-month period (November-January) on October 14. WSI expects the upcoming three-month period to average warmer-than-normal across the eastern half of the US and the Southwest, with below-normal temperatures confined to the northwestern quarter of the country. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

The monthly breakdown for the upcoming fall season follows:
In November:
Northeast - Warmer than normal
Southeast - Cooler than normal
N Central - Warmer than normal
S Central - Warmer than normal
Northwest - Cooler than normal
Southwest - Warmer than normal, except CA

Expected Market Impact (provided by ESAI)        
The WSI November forecast indicates slightly warmer-than-normal temperatures in the key Northeast and Central regions with cooler temperatures, relative to normal, in the Southeast and in the Northwest. Due to warmer temperature expectations, early-season heating demand for natural gas should be slightly below-average across the northern tier of the country. Shoulder season temperatures will moderate power prices in most regions, however, generator planned maintenance programs will impact prices in many regions through late November. Early-season winter cold later in the month is less likely in the Northeast under the warmer-than-normal outlook. If early cold weather arrives in late November, it would be bullish for power prices in areas that have not completed maintenance.    

In December:
Northeast - Colder than normal
Southeast - Warmer than normal
N Central - Colder than normal
S Central - Warmer than normal
Northwest - Cooler than normal
Southwest - Warmer than normal, except CA

Expected Market Impact (provided by ESAI)            
The WSI December forecast indicates cooler-than-normal temperatures in the key heating regions across the northern tier of the country. This should be bullish for natural gas demand and could help to spark an early rally for natural gas prices due to a strong start to the heating season demand. Cooler early-winter season weather will be moderately bullish for power prices in the northern states due to higher than average loads.

In January:
Northeast - Warmer than normal
Southeast - Warmer than normal
N Central - Colder than normal
S Central - Warmer than normal
Northwest - Colder than normal
Southwest - Colder than normal

Expected Market Impact (provided by ESAI)            
The WSI January forecast indicates cooler-than-normal temperatures in the western states and warmer-than-normal temperatures in the eastern states. This will provide a balanced outlook for natural gas demand in January with higher demand expected in the North Central region and slightly lower demand in the east. Strong seasonal starting inventories for natural gas this year should moderate supply concerns. Power prices will be sensitive to gas prices in areas where local deliverability constraints occur under very cold weather conditions such as in New York and New England.

According to WSI seasonal forecaster Dr. Todd Crawford, "The ocean temperature signals in the Pacific Ocean are generally suggestive of a relatively warm period in most of the eastern US during late fall and winter, with the exception of December. Further, neither ocean temperatures in the Atlantic nor the snow cover build up at Arctic latitudes are suggestive are suggestive of sustained cold and snowy weather in the East this upcoming winter. We expect the best chances of sustained cold weather to occur prior to the New Year, with mild conditions prevailing after that."

WSI, which provides customized weather information to energy traders, issues its seasonal outlook twice-monthly. The next new forecast package (for December-February) issued on November 18.

Contacts:
Kristen Sullivan    
Weather Services International     
(978) 983-6607    
ksullivan@wsi.com

Jill Kinsley
ESAI
Communications Manager
(781) 245-2036

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