WSI Calls for Cold Winter in Eastern US, Especially After New Year
WSI and ESAI Say Total Energy Usage Should Be Similar to Last Winter, Reducing Gas Inventories
Andover, MA, November 24, 2009 — WSI expects the upcoming period (December-February) to average cooler than normal in the eastern and south-central US, with above-normal temperatures common across the western and north-central US. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).
“The combination of the current El Nino event,
abundant Eurasian snow cover, and a favorable pattern of ocean temperatures
in the Atlantic Ocean suggest that this winter will be a cold one in the
eastern US, especially after the New Year” said WSI seasonal forecaster
Dr. Todd Crawford. “There are even indications that a significant
pattern change will occur in late November and that December may be colder
than we are currently forecasting. Based upon our forecast and our population-weighting
algorithms, we expect total gas and electricity demand to be of similar
magnitude to last year’s cold winter.”
In December, WSI predicts regional temperature anomalies as follows:
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
According to Paul Flemming of ESAI, “The WSI December forecast shows
warmer-than-normal temperatures in the Northeast and North Central regions
with cooler-than-normal temperatures in the southern regions. The warmer
northern temperatures will moderate the demand effects of cooler temperatures
in the South and West. Lower electrical loads and gas demand for heating
in much of the northern regions will result in lower-than-normal gas demand
in these regions. Delivered gas prices in the West should firm as temperatures
in the region swing from above-normal in November to below-normal in December.”
In January, WSI sees the monthly breakdown as:
Northeast – Colder than normal
Southeast – Colder than normal
N Central – Warmer than normal
S Central – Colder than normal
Northwest – Warmer than normal
Southwest – Warmer than normal
“For January, WSI is forecasting colder-than-normal temperatures
east of the Mississippi and in Texas. With record natural gas inventories
entering the winter, the expected colder-than-normal January in the Consuming
East could help to balance supply by lowering inventories at the end of
the heating season. High fuel oil prices will discourage switching away
from gas in the power sector except when delivered basis prices are very
high in congested areas such as in New York or New England. The effect
of this large fuel-oil-to-gas spread is supportive of local gas demand
(particularly in the Northeast) and delivered gas prices,” said
Paul Flemming. “In the West, warmer-than-normal temperatures should
moderate January regional gas and power prices.”
In February, WSI forecasts:
Northeast – Colder than normal
Southeast – Colder than normal
N Central – Warmer than normal
S Central – Colder than normal
Northwest – Warmer than normal
Southwest – Warmer than normal
“In February, WSI is forecasting significantly colder-than-normal temperatures in the Eastern US and Texas. These regions represent a large portion of the country’s gas demand, and overall demand could be significantly higher than normal for a second month in a row. Combined with higher loads in the power sector, gas demand in February could be bullish for prices despite adequate inventories. Warmer-than-normal temperatures in the Western states are not likely to result in a complete offset to the higher gas demand in the East,” according to Paul Flemming. “Warmer-than-normal temperatures in the Western regions should moderate both gas and power prices.”
WSI, which provides customized weather information to energy traders, will issue its next seasonal outlook (for the January-April period) on December 22.
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