WSI Energycast Outlook Calls for Colder-Than-Normal Spring in Northern US; Warm South
WSI and ESAI issue an update of special interest to energy traders
Andover, MA, March 3, 2009 - WSI Corporation recently issued the seasonal outlook for the upcoming three-month period (March-May). WSI expects the upcoming three-month period to average colder than normal across the northern half of the US, with above-normal temperatures across the South. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).
The monthly breakdown follows:
In March:
- Northeast – Cooler than normal
- Southeast – Warmer than normal
- N Central – Colder than normal
- S Central – Warmer than normal
- Northwest – Colder than normal
- Southwest – Warmer than normal
Expected Market Impact (provided by ESAI)
The WSI March forecast indicates warmer-than-normal temperatures throughout
the South, with much warmer-than-normal temperatures in eastern Texas
and the northern Gulf States. These early warmer-than-normal temperatures
will boost peak loads in ERCOT where scheduled generator maintenance will
reduce available baseload capacity modestly. The increased reliance on
natural gas to fill the gap should add some marginal demand to the regional
gas market, and provide some price weather related support to natural
gas prices. Cooler-than-normal temperatures in the Northeast should keep
heating demand above the 5-year average, but below last year’s level
when very cold temperatures lingered in the Consuming East through March.
Cooler-than-normal temperatures are also expected in Consuming West. This
should keep weather related demand slightly above normal there as well.
Weather-related demand for power and natural gas is expected to be above
average throughout the Continental U.S. in March.
In April:
- Northeast – Colder than normal
- Southeast – Warmer than normal, except SC/NC
- N Central – Colder than normal
- S Central – Warmer than normal
- Northwest – Colder than normal
- Southwest – Warmer than normal
Expected Market Impact (provided by ESAI)
WSI’s April forecast indicates colder-than-normal temperatures in the Northeast, Upper Midwest, and West; warmer-than-normal temperatures are expected to remain in place in the South. The largest deviations from normal are expected again in Texas where cooling demand will kick-in slightly ahead of schedule. Most generator maintenance is scheduled to end in ERCOT by the beginning of April, however. This returning generation will offset the increase in cooling load and temper increases in heat rates and power prices associated with the warmer-than-normal temperatures in Texas. Combining with cooler-than-normal temperatures in the Northeast, generation capacity lost to scheduled maintenance will keep heat rates somewhat firm in that region. A significant nuclear maintenance season in PJM will keep heat rates firm in that control area in particular. Weather-related energy demand is expected to be slightly above normal in April.
In May:
- Northeast – Colder than normal, except NJ/DE/MD
- Southeast – Warmer than normal
- N Central – Colder than normal
- S Central – Warmer than normal
- Northwest – Colder than normal
- Southwest – Warmer than normal
Expected Market Impact (provided by ESAI)
The WSI May forecast indicates colder-than-normal temperatures in the
northern tier of the country, and warmer-than-normal temperatures in the
southern portion of the country (from Nevada to Virginia). Although Texas
is again expected to be warmer than normal, the largest deviation from
the norm will be in the Four Corners region of the country (where cooling
demand has less of an affect on aggregate U.S. energy consumption). Despite
ongoing generator maintenance in the Northeast and Midwest, weather-related
energy demand is expected to have very little effect on prices in these
regions in May given the slightly cooler-than-normal forecast. With cooling
demand widespread throughout the southern tier of the country, however,
heat rates in the South may run slightly higher than normal. Power prices,
on the other hand, are generally less affected by weather-related demand
in May and will likely be more dependent on aggregate storage levels and
macro-economic factors.
According to WSI seasonal forecaster Dr. Todd Crawford, “The general pattern of cold-north and warm-south observed during the winter will generally continue into early spring. The warmest temperatures, relative to normal, will continue to be in the south-central states where drought conditions may linger and create a positive feedback loop that will help to perpetuate the warm and dry conditions. The coolest temperatures this spring, relative to normal, will occur in the western US as a persistent Aleutian ridge continues to flex its muscle.”
WSI, which provides customized weather information to energy traders, issues its seasonal outlook twice-monthly. The next new forecast package (for April-June, plus an early look at the June-August summer forecast) will be issued on March 17.
About WSI Corporation
WSI is the most trusted source of weather information across the globe. Top
insurance, risk management companies and financial institutions, worldwide,
trust WSI to supply them with easy-to-use, timely and expert weather guidance
to help anticipate market volatility, mitigate risk and make critical decisions
with confidence. 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. For more information,
please visit us on the web at www.wsi.com
or call us at 877.WSI.CORP or +44.121.233.7600.
About ESAI Corporation
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 visit
www.esai.com
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