WSI Calls for Warm Period in Western US and Northeast during September-November Period; Cool Southeast

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WSI expects the upcoming period (September-November) to average cooler than normal in the southeastern US, with above-normal temperatures common elsewhere. 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).

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We expect cash prices at Henry Hub will likely trade with a two-handle for a large portion of the month with price-induced shut-ins of production and gas-on-coal competition balancing the supply/demand equation. Shoulder-season dynamics and generator maintenance should overshadow weather variations in October, as lower demand for gas and power means less dependence on weather.

WSI expects the upcoming period (September-November) to average cooler than normal in the southeastern US, with above-normal temperatures common elsewhere. 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).

"The pattern that resulted in a record cold July in many eastern US locations has finally abated," said WSI seasonal forecaster Dr. Todd Crawford. "We expect the warmer pattern to continue in September, with the exception of the Southeast, where conditions will likely be cooler and wetter than normal. By October and November, the impacts from the current El Nino event will begin to take hold with increased chances of cold temperatures across much of the eastern US. The pattern for the upcoming winter will depend strongly on the evolution of this El Nino event during the next few months. A weaker event centered farther east in the tropical Pacific will more likely enable a cold winter in much of the eastern US, while a stronger and more west-centered event would increase the odds of a very mild winter in the Northeast. We currently favor slightly the former, colder idea, but with very high uncertainty at this point."

In September, WSI predicts regional temperature anomalies as follows:
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

According to Chris Kostas, ESAI's Natural Gas Analyst, "Weather-related natural gas demand in September should be higher than normal due to warmer-than-normal temperatures forecast by WSI throughout most regions of the country. Continued slack industrial demand, however, and the seasonally cooler temperatures of September should offset the marginal effects of these warm temperatures. Barring any significant hurricane disruptions, natural gas prices will remain depressed in September and inventories should approach the previous record of 3,545 Bcf (set November 2, 2007) by the end of the month."

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

"The WSI October forecast indicates much warmer-than-normal temperatures in western Texas and west of the Rockies; and slightly warmer-than-normal temperatures in the Northeast and Florida. Cooler-than-normal temperatures are expected in the Great Lakes region and the Southeast (except Florida). From a weather-related perspective, October appears neutral on demand as the above-average demand from the West will be offset by the lower demand of the central Gulf States, Southeast and Mid-West. Barring hurricane disruptions, natural gas storage inventories are expected to break the previous inventory record early in October," said Chris Kostas of ESAI. "We expect cash prices at Henry Hub will likely trade with a two-handle for a large portion of the month with price-induced shut-ins of production and gas-on-coal competition balancing the supply/demand equation. Shoulder-season dynamics and generator maintenance should overshadow weather variations in October, as lower demand for gas and power means less dependence on weather."

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

"The WSI November forecast indicates that the cooler-than-normal temperatures of October will expand eastward, with the largest deviations from the norm expected throughout the Southeast. This relatively cool forecast, combined with colder seasonal temperatures, will boost demand significantly from October's depressed shoulder-month levels. The warmer-than-normal weather in the West will reduce regional seasonal heating demand slightly; however, the effects of the cooler weather in the East will outweigh the effects in the West. On-balance, November should be bullish from a weather-related perspective," noted Chris Kostas. "Power prices in November should be supported by firmer spot gas prices and firmer peak loads."

WSI, which provides customized weather information to energy traders, will issue its next seasonal outlook (for the October-January period) on September 23.

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 a member of The Weather Channel Companies and is headquartered in Andover, Massachusetts with offices in Birmingham, England. The Weather Channel Companies are owned 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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WSI
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