WSI expects increased cold in NE United States

Dec. 20, 2011, Andover, MA –  WSI (Weather Services International)
expects the upcoming period (January-March) to average colder than normal across most of the northern and western US, with above-normal temperatures confined to the south-central and southeastern states. The WSI seasonal outlooks now reference a standard 30-year normal (1981-2010).
 
"So far, the heating season has been fairly mild across the major energy demand centers of the US, as a very strong polar vortex has kept most of the significant and sustained cold out of the eastern US. While no significant short-term change to this pattern is expected, we do foresee at least a slight weakening of the polar vortex heading into January. This will increase the odds of some colder spells in the Northeast," said WSI Chief Meteorologist Dr. Todd Crawford.

Weather Services International forecasts that the first quarter of 2012 will be colder than average in the northern US, and slightly warmer in the south-central and southeastern states.

"The general pattern for the remainder of winter will continue to be dominated by the current La Nina event, which favors below-normal temperatures across most of the northern and western US and above-normal temperatures across most of the South. This winter has been very different than the last two, so far, due to the much stronger polar vortex and the lack of any atmospheric blocking, which is the primary cause for colder eastern US temperatures. These conditions will likely result in significantly reduced heating demand, relative to last year. For the January-March aggregate period, we still feel that below-normal temperatures will occur north of an El Paso-Washington DC line. However, from a gas-demand perspective, we expect the January-March period to be the mildest in the US since 2006. In total, our forecast calls for a 5.4% reduction in heating demand relative to last winter, but a 4.3% increase relative to the 1981-2010 averages."
 
In January, WSI sees the monthly breakdown as:
Northeast* -Colder than normal
Southeast *- Warmer than normal
N Central*   – Colder than normal
S Central*    – Warmer than normal
Northwest* -Colder than normal
Southwest*  -Colder than normal
 
According to Paul Flemming, Director at ESAI,"In January, colder-than-normal temperatures will be slightly bullish for natural gas demand. Effective under the new Cross State Air Pollution Rule starting January 1, new limits on SO2 (sulfur dioxide) and NOx (nitrogen oxide) emissions are also likely to have a measurable,bullish impact on gas demand, in addition to the colder weather. Natural gas inventories are likely to experience significant draw downs in January as a result of higher heating demand, although possibly less than in previous years. Increased demand expected in the Northern and Western regions will be somewhat offset by warmer-than-normal temperatures in the South."
 
In February, 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   -Colder than normal
 
Flemming added, "Although the Northeast, Upper Midwest and Western regions are expected to run colder-than-normal in February, large portions of the Midwest, Mid-Atlantic and Southeast regions are forecast to be warmer than normal. Milder temperatures should soften aggregate heating demand in February and are likely to soften delivered gas prices in the Northeast markets, relative to January. Milder weather and softer delivered natural gas prices will combine with lower loads to moderate power prices in the eastern markets."
 
In March, 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
 
"Following a milder February, temperatures in March are expected to be colder than normal across the northern tier of the country where most of the heating demand for gas is anticipated to be found. Late winter gas demand in March could be supportive of prices, although following milder February conditions and generally higher natural gas production expectations, bullish expectations for natural gas prices may be limited," Flemming noted. "Delivered gas prices to destination markets should decline as temperatures increase through March; and combined with marginally lower electric loads, power prices in most markets should be moderate."
 
WSI, which provides customized weather information to energy traders, will issue its next seasonal outlook on January 24.
 
About WSI

WSI (Weather Services International) 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 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 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 www.esai.com.