WSI Calls for Continuation of Cool Temperatures in Most of Eastern US; Warm West, during August-October Period

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WSI and ESAI Say Persistence of Cool Weather Will Engender Lower Loads, Moderate Power Prices for Energy Traders

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The WSI September forecast indicates warmer-than-normal temperatures in most of the country and much-warmer-than-normal temperatures in Texas and the Southwest. Due to prevailing warmer temperatures in the West, natural gas demand from the power sector should be above average in September, but this higher demand will not likely offset the trend towards very high inventories in early November

WSI expects the upcoming period (August-October) to average cooler than normal across the eastern half of the US, with above-normal temperatures common across the western US. Areas from the Southwest to the Pacific Northwest may be especially warm, compared to historical normals. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

"There is no immediate sign that the very cool pattern in much of the eastern US will abate," said WSI seasonal forecaster Dr. Todd Crawford. "Persistence is a rather useful forecasting tool during the heart of the summer, especially in the absence of any significant pattern-altering tropical system. For that reason, we have generally used persistence as our forecast for August. Looking farther out in time, we expect a brief transition towards above-normal temperatures in September across much of the Northeast. By October, the emerging El Nino event and expected change in phase of the Pacific Decadal Oscillation both argue strongly for a cold month across much of the eastern US. There are no strong signals for any sustained cool weather in the western US during the upcoming period."

In August, WSI predicts regional temperature anomalies as follows:
Northeast     - Cooler than normal
Southeast     - Cooler than normal
N Central     - Cooler than normal
S Central     - Warmer than normal
Northwest     - Warmer than normal
Southwest     - Warmer than normal

According to Paul Flemming, ESAI's Director of Power and Gas, "Natural gas demand from the power sector will be higher due to warmer temperatures in the Southwest and dry conditions in the Northwest, however, cooler weather in the East will largely offset this demand. Barring any significant hurricane activity, power sector demand for natural gas in August will not reverse the trend of well above average inventory build rates and will result in continued pressure on prices. For the power markets in the East, the big news is that there will be a reduced likelihood of heat events in August, even after a very mild July."

In September, WSI sees the monthly breakdown as:
Northeast     - Warmer than normal
Southeast     - Cooler than normal
N Central     - Warmer than normal
S Central     - Warmer than normal
Northwest     - Warmer than normal
Southwest     - Warmer than normal

"The WSI September forecast indicates warmer-than-normal temperatures in most of the country and much-warmer-than-normal temperatures in Texas and the Southwest. Due to prevailing warmer temperatures in the West, natural gas demand from the power sector should be above average in September, but this higher demand will not likely offset the trend towards very high inventories in early November," said Paul Flemming of ESAI. "Higher probabilities of late summer heat events continue for Texas and the Southwest in September along with a likelihood of higher price volatility."

In October, WSI forecasts:
Northeast     - Cooler than normal
Southeast     - Cooler than normal, except FL
N Central     - Cooler than normal
S Central     - Warmer than normal
Northwest     - Warmer than normal
Southwest     - Warmer than normal

"The WSI October forecast indicates a continued trend of cooler-than-normal temperatures in the eastern half of the country and much-warmer-than-normal temperatures in Texas and the Southwest. Shoulder-season dynamics should overshadow weather variations as lower demand for gas and power means less dependence on weather," noted Paul Flemming. "Power prices will be supported by generator maintenance, and gas demand from the power sector should be supported by coal plant maintenance and nuclear refueling."

WSI, which provides customized weather information to energy traders, issues its seasonal outlook twice-monthly. The next new forecast package (for the September-November and October-December periods) will be issued on August 26.

About WSI
WSI Corporation is the world's leading provider of weather-driven business solutions for professionals in the energy, agriculture, insurance, 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.
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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    

Tommy Sutro
ESAI, Energy Security Analysis, Inc.
(781) 245-2036

Editorial Contact:
Barbara Rudolph    
Rudolph Communications, LLC
(781) 229-1811

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