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WSI Calls for Moderate Winter with Warming in March

WSI Corp. said last week that from January-March it expects cooler-than-normal temperatures on average across the northern tier of states and along the Pacific Coast but warmer-than-normal temperatures elsewhere.

Referencing a standard 30-year normal (1971-2000), the Andover, MA-based forecasting firm said the East could see some warming in the near term. "Our models suggest a return to above-normal temperatures in much of the eastern US in January, especially in the Southeast, followed by colder temperatures in February," said WSI seasonal forecaster Dr. Todd Crawford.

For January, WSI said the entire East, the South Central and the Southwest portions of the country are expected to experience warmer than normal temperatures, while the north Central and Northwest regions will see cooler than normal weather.

Commenting on WSI's January forecast, Energy Security Analysis Inc. (ESAI) said the warm forecast "reduces the probability of severe cold in the Northeast where there is a high degree of concern that delivery curtailments due to gas pipeline limitations could occur under very high demand conditions. The cool outlook for the North Central States will provide a bullish demand offset to the potentially lower demands in other areas. Warmer-than-normal temperatures will moderate electric loads, particularly in the Northeast markets."

In WSI's forecast for February, cooler than normal temperatures are likely to flood the East region, while the rest of the country is expected to be warmer than normal, especially in Minnesota, North Dakota and Texas.

ESAI said the probability of cold snaps in New England increases and the congestion on the local gas systems during severe cold weather may cause delivered prices to spike strongly. "The cooler-than-normal temperatures in the Northeast will increase natural gas demand, but warmer temperatures in the North Central and Plains states will lower gas demand in these areas," ESAI said. "Power prices in the Northeast will be strong due to higher loads and the higher likelihood of stronger delivered gas prices."

WSI said it expects early warming in March for the U.S. with the exception of the Southwest and Washington and Oregon, which should experience cooler than normal temperatures. The rest of the country should see warmer than normal temps, with Maine, Texas and Louisiana being especially warm.

"The warmer temperature outlook for the last month of winter should be moderately bearish for both gas and power prices, as demand should be slightly lower than normal," the ESAI said. "A warmer March in the northern tier of the country would result in higher natural gas inventories at the end of the withdrawal season."

WSI's next forecast update for January-March will be issued on Dec. 29, with the next new forecast package (for February-April) issued to clients on Jan. 17 and to the press on Jan. 24.

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