WSI Energycast Outlook Calls for Colder-Than-Normal Period in US, Especially in Northern States

WSI Corporation recently issued the seasonal outlook for the upcoming three-month period (February-April). WSI expects the upcoming three-month period to average colder than normal across most of the US, with the exception of the southeastern quarter of the country. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

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Andover, MA (PRWEB) January 29, 2009

WSI Corporation recently issued the seasonal outlook for the upcoming three-month period (February-April). WSI expects the upcoming three-month period to average colder than normal across most of the US, with the exception of the southeastern quarter of the country. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

The monthly breakdown follows:
In February:
Northeast     - Colder than normal
Southeast     - Warmer than normal
N Central     - Colder than normal
S Central     - Warmer than normal
Northwest     - Colder than normal
Southwest     - Warmer than normal

Expected Market Impact (provided by ESAI)            
The WSI February forecast indicates colder-than-normal temperatures in the key demand centers of the Northeast and Midwest; colder-than-normal temperatures are also expected in the Pacific Northwest and California. Warmer-than-normal temperatures are expected in Texas and Florida. With inventories in the Consuming East six percent below both the five-year average and last year's level, basis pressure can be expected in the Northeast. Higher basis pricing is expected to keep power prices firm in NY, NE, and PJM, though heat rates are likely to soften due to fuel switching. Relatively low prices for fuel oil this year have already had an impact on implied market heat rates in those regions during recent periods of basis strength. Temperatures in California are expected to be slightly milder in February than the December forecast had indicated. With inventory levels in the Consuming West back to twelve percent above the five-year average, soft basis pricing is likely to continue at western hubs (though prices may firm from the depressed prices of January).

In March:
Northeast     - Colder than normal
Southeast     - Warmer than normal
N Central     - Colder than normal
S Central     - Colder than normal, except AR/LA
Northwest     - Colder than normal
Southwest     - Colder than normal

Expected Market Impact (provided by ESAI)            
The WSI forecast for March indicates colder-than-normal temperatures in the Upper Midwest, Northeast, and California; while warmer-than-normal temperatures are expected to remain in place in the South. As a result, natural gas prices at Henry Hub are likely to remain subdued through the end of the withdrawal period, while basis pricing in the Northeast is likely to remain firm. The Consuming East is at a six percent deficit to the five-year average and with a colder-than-normal February, natural gas basis to the Northeast will likely remain firmer than normal in March. Although slightly colder-than-normal temperatures are expected along the West Coast, abundant inventories in California will keep prices moderate. California power prices are expected to remain subdued in March as a result.

In April:
Northeast     - Colder than normal
Southeast     - Warmer than normal, except MS
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 April forecast indicates colder-than-normal temperatures along the West Coast, and throughout the northern portion of the country. Warmer-than-normal temperatures are expected in the South (and particularly in Texas). As a result, aggregate natural gas demand for April will likely be higher than normal. With heating demand lingering in NY and NE (the start of the generator maintenance period), power prices may be firm despite the lower electrical loads of the shoulder period. Despite WSI's expectation of colder-than-normal temperatures in the Consuming East and the Consuming West over the next 3 months, year-over-year increases in North American natural gas production capacity are expected to leave inventories at healthy levels at the end of the withdrawal season. ESAI currently expects ending stocks of around 1,500 Bcf; though that number could be higher considering fuel switching for power generation will play a larger role this winter than it has over the past two years.

According to WSI seasonal forecaster Dr. Todd Crawford, "The general pattern of cold-north and warm-south observed during the winter so far will generally continue into early spring. The warmest temperatures, relative to normal, will be in the south-central and southeastern states while the coldest temperatures will continue to be observed in the north-central states.    The cold Pacific Ocean suggests that the upcoming aggregate three-month period will be relatively cold nationwide, relative to normal, especially in March and April. An incipient stratospheric warming event, which appears to be historic in magnitude, may continue to favor more Arctic air masses in mid-latitudes and increases confidence in the widespread cold forecast of the US these upcoming few months."

WSI, which provides customized weather information to energy traders, issues its seasonal outlook twice-monthly. An update to the current forecast will be issued on January 29, while the next new forecast package (for March-May) will be issued on February 24.

About WSI
WSI Corporation is the world's leading provider of weather-driven business solutions for professionals in the energy, aviation, and media markets, and multiple federal and state government agencies. WSI is headquartered in Andover, Massachusetts with offices in Birmingham, England and was recently purchased by a consortium made up of NBC Universal and the private equity firms The Blackstone Group and Bain Capital. More information about WSI can be found at http://www.wsi.com.

About ESAI
Since its inception in 1984, Energy Security Analysis Inc. (ESAI) has been dedicated to monitoring, analyzing, and synthesizing information about world-wide energy markets. Tapping the talents of its senior-level staff, ESAI provides clients with unparalleled insight into where the markets have been and where they are headed. ESAI provides ongoing systematic analysis of energy prices in the oil, natural gas, and energy markets. For more information on ESAI services, see http://www.esai.com.

Contacts:
Kristen Sullivan    
Weather Services International
(978) 983-6607    

Jill Kinsley
ESAI
(781) 245-2036

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