Referencing a standard 30-year normal (1971-2000), WSI Corp. said last week that its forecast for the October-December period is expected to average cooler-than-normal temperatures in the northwestern quarter of the country with warmer-than-normal temperatures elsewhere. If proven true, the forecast could alleviate natural gas supply and storage concerns entering the 2005-2006 winter.
"Recent significant changes in the North Pacific ocean temperatures have resulted in changes in our forecast model output, and we are expecting a warm start to the heating season in the major population centers of the East and Midwest," said WSI seasonal forecaster Dr. Todd Crawford. "It is still too early to tell if this warm start will persist into the heart of winter."
In its monthly breakdown, the Andover, MA-based forecasting agency said October conditions are expected to be cooler than normal in the Southeast, South Central and North Central regions of the U.S., while West and Northeast is expected to see warmer than normal temps.
Commenting on WSI's forecast for October, Energy Security Analysis Inc. (ESAI) said, "Some early-season heating demand for natural gas could develop for the North Central region, however, warmer-than-normal temperatures in the New York and New England regions will offset this demand. October is a low-demand month for both power and gas, therefore temperature variances from normal have relatively low price impacts.
"Electric loads should be low during the peak of the maintenance season in the second half of October. However, late season warm weather can cause higher loads to occur at a time when generator outages are high. The probability of this occurring is greater with the warmer-than-normal forecast in the Northeast. Injections of natural gas should be higher during October, but the return of natural gas production due to Katrina is still questionable."
In November, WSI predicts that the East and Central portions of the country (except for western Texas, Oklahoma and Kansas) will be warmer than normal, while the West records cooler than normal temperatures.
ESAI said that WSI's November forecast indicates that there might be a delay in the start of the heating season, which will allow more time for injections to storage. ESAI's storage projections indicate the 3.1 Tcf storage target will not be reached by the end of October. "If October injections are strong and injections continue into mid-November, then the 3.1 Tcf target may be reached," ESAI said. "This would take some of the bullish uncertainty out of the market. In the oil markets, heating oil inventories are at very high levels, and the warmer-than-normal November outlook should help to moderate heating oil prices."
Surprisingly, December will likely bring even more warmth to the country. In fact, the entire U.S. is expected to see warmer than normal temperatures with the exception of the Northwest, which is forecast to be cooler than normal.
"After the Katrina-related supply disruptions, the warmer December outlook will be welcome news for those concerned about winter natural gas supplies," ESAI said. "Warmer weather in the heating regions for December may not drive natural gas prices lower, but it will help to avoid the supply uncertainty that comes with a very cold start to the winter. Warmer weather and moderate natural gas prices will keep loads and prices in the power markets from escalating early in the season."
WSI's next forecast update for October-December will be issued on Sept. 29, with the next new forecast package for November-January issued to clients on October 18 and to the press on October 27.
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