NGI The Weekly Gas Market Report / NGI All News Access

WSI Calls for 'Cooler' Northern Temps From May to July

Spring-like cool temperatures could extend through July for a majority of the northern U.S., according to WSI Corp., an Andover, MA-based provider of weather-driven business solutions,

Going off of its most recent Energycast, WSI Corp. said the May-July period is expected to average cooler-than-normal in the northern Rockies, northern and central Plains, the Great Lakes and the Northeast, while warmer-than-normal temperatures are expected in the Pacific Northwest, Southwest, southern Plains and Southeast.

"Our latest forecast models indicate that the cool weather will be the rule across the northern tier, while some significant heat may build in the Southeast by July," said WSI seasonal forecaster Dr. Todd Crawford.

In the monthly breakdown, WSI said a majority of the country will be warmer than normal with the exception of the Northeast and North Central regions, which are expected to see cooler than normal temps.

While some areas are expected to be cooler than normal for the month, Energy Security Analysis Inc. (ESAI) said the more important part of the forecast is the projection that the Southeast and parts of the Southwest are forecast to experience significantly warmer-than-normal temperatures. "While gas and power demand for May is typically low, unseasonably hot weather can push electrical demand to near summer levels at a time when generator maintenance season is still under way," ESAI said in commenting on WSI's May forecast.

"Power prices in the Southeast and Southwest could be very bullish during an early season heat event due to the maintenance outages," ESAI added. "Natural gas has started the injection season ahead of the five-year average and cooler weather in the northern areas should delay air conditioning demand, which will lower power sector gas demand and offset potentially higher power sector gas demand in the Southeast and Southwest."

The arrival of June is expected to keep most areas of the country warmer than normal with the exception of the Northeast and South Central regions, which will be cooler than normal, according to WSI.

ESAI said the early season cool weather should moderate power sector demand for natural gas and allow natural gas storage injections to continue at a normal to above normal rate. "This will have a moderating influence on natural gas prices," ESAI said. "Moderately warmer-than-normal temperature expectations in other markets during June should not have a significantly bullish impact on power prices, although a slight increase in the chance for a heat event provides for some increased price volatility."

With June gone, July is expected to bring cooler than normal temps to the Northwest and North Central regions along with New Hampshire, Maine, Massachusetts and Rhode Island. The Southeast, South Central, Southwest and the remainder of the Northeast are expected to record warmer than normal temps for the month.

ESAI said the higher temperature outlook for these areas in July means increased peak load demand patterns and an "increased potential" for extended heat events. "These heat events not only increase demand for cooling but they also stress mid-level units by requiring extended operations," ESAI said. "This provides for an increased rate of forced outages, which is an additional bullish factor. Natural gas prices will have a bullish underpinning during hot weather despite higher inventories that are likely by July. Cooler temperatures in the Northwest and North Central states will not provide much offset to higher gas demand in the other regions."

©Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus