WSI Calls for Cold Period in Southeast, most of Central US during October-December Period
WSI and ESAI Say Near-Normal Fall Temperatures in Key Demand Areas Will Temper Bullishness in Natural Gas Prices
Andover, MA, September 22, 2009 — WSI expects the upcoming period (October-December) to average cooler than normal in the southeastern and central US, with above-normal temperatures common across the Northeast and Southwest. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).
“A moderate El Nino event will likely persist through
the winter, resulting in cool weather across the Southeast” said
WSI seasonal forecaster Dr. Todd Crawford. “However, ocean temperatures
in the North Pacific are not currently supportive of a typical El Nino
pattern this upcoming winter. If this persists, this winter will likely
be colder in the western US than is typical during El Nino events. In
the Northeast, we expect a relatively mild fall, with increased chances
of sharply colder weather after the New Year. The combination of various
climate indices suggests that the winter will likely arrive late but loudly
in much of the East, and that a mild start will not necessarily persist
through the winter.”
In October, WSI predicts regional temperature anomalies as follows:
Northeast – Warmer than normal
Southeast – Colder than normal
N Central – Colder than normal
S Central – Colder than normal
Northwest – Colder than normal
Southwest – Warmer than normal
According to Paul Flemming of ESAI, “The WSI October forecast indicates
warmer-than-normal temperatures in the Northeast and colder-than-normal
temperatures in most of the rest of the country, particularly the North
Central region. Early season cold in October may prompt mild heating demand
in the North Central region, but warmer temperatures in the Northeast
population centers may offset this. Cooler weather will not be enough
to offset expectations of an early fill of natural gas inventories. If
the hurricane season remains benign, natural gas storage inventories are
expected to break the previous inventory record in October. We expect
cash prices at Henry Hub to trade below $3.00 for a large portion of the
month forcing some production shut-ins. In the power markets, generator
maintenance should overshadow weather variations in October.”
In November, WSI sees the monthly breakdown as:
Northeast – Colder than normal
Southeast – Colder than normal
N Central – Colder than normal
S Central – Colder than normal
Northwest – Warmer than normal
Southwest – Warmer than normal
“The WSI November forecast indicates that cooler-than-normal temperatures
will cover all of the consuming East with warmer temperatures in the West.
The cooler outlook as we enter the heating season will boost natural gas
demand and could trigger an early start to inventory withdrawals. In the
power markets, generator maintenance will continue into November and will
exert more influence on prices than nominally cooler temperatures in the
November shoulder month. November should be moderately bullish for gas,
although record high inventories will weigh on the market,” noted
Paul Flemming.
In December, WSI forecasts::
Northeast – Warmer than normal
Southeast – Colder than normal
N Central – Warmer than normal
S Central – Colder than normal
Northwest – Colder than normal
Southwest – Colder than normal
“The WSI December forecast indicates that the warmer-than-normal temperatures will prevail across the northern tier of the country. This warmer weather in the key heating markets will be disappointing for natural gas demand. Lower demand in early winter combined with high inventories will be very bearish for prices. Cooler-than-normal weather in the rest of the country will not likely provide a demand offset to lower demand in the key northern heating markets,” said Paul Flemming. “Power prices in December could be moderated by continued weakness in the gas markets.”
WSI, which provides customized weather information to
energy traders, will issue its next seasonal outlook (for the November-February
period) on October 19.
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