WSI: Below-Normal Winter Temperatures Expected Across the Northern US with Mild Winter Across the South

Arctic Air Expected to be Frequent Guest in Largest Gas-Demand Population Centers.

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WSI US Weather Outlook Dec. 2012 - Feb. 2013

WSI US Weather Outlook Dec. 2012 - Feb. 2013

While this El Nino event now appears to be a dud, most of our more skillful climate indicators suggest that very cold air will be in plentiful supply across western and central Canada this winter, with frequent border crossings into the northern US.

Andover, MA (PRWEB) November 20, 2012

WSI (Weather Services International) expects the December-February period to be colder than normal across much of the northern half of the US, especially the northern Rockies and northern Plains. Above-normal temperatures will be common across the southern US, especially in the Southwest. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010).

“After an extended spell of above-normal temperatures across much of the US during the past 18 months, the last few months have been characterized by below-normal temperatures across much of the eastern US, as a weak El Nino event has tried to emerge” said Dr. Todd Crawford WSI Chief Meteorologist. “While this El Nino event now appears to be a dud, most of our more skillful climate indicators suggest that very cold air will be in plentiful supply across western and central Canada this winter, with frequent border crossings into the northern US. Currently, we do not expect the kind of frequent atmospheric blocking in the North Atlantic (otherwise known as the negative NAO) that would result in more extreme and more widespread cold in the eastern US. However, trends in some of the long-lead indicators suggest that this assumption may be challenged, and that the risk to the forecast in the eastern US is towards the colder side.”

In December, WSI sees the monthly breakdown as:
Northeast* – Colder than normal, except northern New England
Southeast* – Warmer than normal
N Central *    – Colder than normal
S Central*     – Warmer than normal
Northwest* – Colder than normal
Southwest* – Warmer than normal

According to Chris Kostas, Senior Power and Gas Analyst at ESAI, “With WSI’s shift towards cooler expectations in December, we now expect natural gas prices to be supported heading into winter. Natural gas prices are often supported in December, as expectations for even colder temperatures in January defer discretionary withdrawals from storage. We expect this seasonal tendency will likely occur this year. Heating demand along much of the northern tier of the county is expected to run above normal in December (and January). The upside to prices may be limited, however, as inventories and production rates are strong heading into the winter heating season. The Energy Information Administration (EIA) reported record inventory levels in November (i.e. 3,929 Bcf on November 2, beating last year’s record by 77 Bcf). In addition, the cooler weather (and increased heating demand) in the North should be partially offset by milder temperatures in the South. With the exception of New England and eastern portions of New York, Mid-Atlantic and the Northeast, basis prices are expected to be modest, relative to historic averages. This is primarily due to year-over-year, shale–gas-production increases in Pennsylvania. New England, which is dependent on the Tennessee Gas and Algonquin pipeline systems to deliver most of its gas, has been demonstrating seasonal price strength, due to the growing dependence on natural gas for power generation.”

In January, WSI forecasts:
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

“While heating demand is expected to run below normal in the southern two-thirds of the country in January, cooler than normal temperatures are expected in the North. The cooler Northern temperatures and above-normal heating demand in the North Central and Northeast regions should more than offset the reduced demand of the South. Gas prices are likely to be firm during the coldest temperature periods, but with robust supplies (i.e. high inventory levels and strong production rates) price spikes are likely to be limited in both magnitude and duration. New England and portions of eastern New York will likely experience very sharp price spikes in January, however. Indications in the futures market have priced in these effects, with gas basis prices trading below the 5-year average in the Mid-Atlantic (i.e. Tetco M3) but well above the 5-year average in New England (i.e. Algonquin Citygates). Power prices at Mass Hub are expected to be firm, while expectations at PJM Western Hub are much more modest. Soft power prices are also expected in Texas and California due to the mild January temperatures expected in those regions.” Kostas noted.

In February, WSI forecasts:
Northeast     – Warmer than normal
Southeast     – Warmer than normal
N Central     – Colder than normal
S Central     – Warmer than normal
Northwest     – Warmer than normal
Southwest    – Warmer than normal

“While colder-than-normal temperatures are only expected in the North Central region of the country, the increase in gas demand in that key region should more than offset the below normal demand in the South and West. Typically, Mid-Atlantic gas basis prices would surge under these circumstances But with new shale gas supplies in Pennsylvania Tetco, M3 prices should be modest (with only temporary prices spikes). The slightly above-normal aggregate heating degree days expected in the U.S. should help to rebalance inventories and gas prices (which finished last winter at record high and low levels, respectively). While the colder than normal temperatures expected in the Mid-West will increase power and gas demand in the region, the upside should be limited. Coal-fired generation that has been sidelined due to poor economics may find some breathing room to increase run rates. Under these circumstances, increased coal-fired generation should help to limit gains in both power and gas prices this winter,” Kostas added.

WSI provides customized weather information to global commodity traders via its industry-leading WSI Trader Web site. WSI will issue its next seasonal outlook on December 27.

*To view the map defining WSI’s US regions, click here.

About WSI Corporation
WSI (Weather Services International) and Weather Central are the world's leading providers of weather-driven business solutions for professionals in the energy, aviation, insurance and media markets as well as multiple federal and state government agencies. Together they comprise the professional division of The Weather Company and are owned by a consortium made up of NBC Universal and the private equity firms The Blackstone Group and Bain Capital.

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:
Linda Maynard    
WSI
(978) 983-6715    
lmaynard (at) wsi (dot) com

Tommy Sutro
Energy Security Analysis, Inc.
(781) 245-2036
tsutro (at) esai (dot) com

Editorial Contact:
Barbara Rudolph    
Rudolph Communications, LLC
(781) 229-1811
bjr (at) rudolphcommunications (dot) com


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