WSI Calls for Warm Period in Western US and Northeast during September-November Period; Cool Southeast
WSI and ESAI Say Persistence of Cool Weather Will
Engender Lower Loads, Moderate Power Prices for Energy Traders
Andover, MA, August 26, 2009 — 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.
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