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ESAI: Warm April Forecast Cuts Chances for Late Season Storage Withdrawals

A warmer-than-normal April weather forecast released by WSI Corp. last week should have a bearish gas market impact because warm April temperatures will decrease the likelihood of any late-season withdrawals from storage, which already is 60% higher than the five-year average, according to consulting firm Energy Security Analysis Inc. (ESAI).

In its three-month seasonal outlook (April-June), WSI said it expects temperatures to average warmer than normal across most of the United States, with the exception of the extreme northern tier of states and all of the Northeast. In April, WSI expects the Northeast (except Maine), Southeast, North Central, South Central (except Texas) and Southwest to be warmer than normal. The Northwest is the only region where colder-than-normal temperatures are expected in April.

"The current unseasonably cold pattern will moderate by the end of the month, and we feel that April will be characterized by a big warm-up over much of the U.S., with the exception of the Northeast, where cool temperatures will linger," said WSI forecaster Todd Crawford. "As we progress into late spring, it appears that most of the southern U.S. will experience very warm temperatures, with any cool weather confined to more northern latitudes."

In May, WSI's forecast of warmer-than-normal temperatures in the central and southern areas of the country could lead to increased demand for gas from the power sector, ESAI said. However, cooler weather in the key Northeast demand area could offset that.

The May forecast calls for the Southeast (except Mississippi and Alabama), the North Central (except Minnesota and North Dakota), the South Central and the Southwest (except California) to have warmer-than-normal temperatures. Cooler-than-normal temperatures are expected in the Northwest, especially in Washington.

June is expected to bring warmer-than-normal weather throughout most of the country, which will increase the chance for some early season heat events to drive up gas demand from power generators. The forecast shows the Southeast, South Central, Northwest (particularly Idaho and Wyoming) and the Southwest (especially Arizona and New Mexico) experiencing above-normal heat. Only the North Central region is expected to have cooler-than-normal temperatures.

WSI said it successfully predicted the warm weather in the eastern U.S. in January and the warm 2005-06 U.S. winter as a whole. It also was successful last year in predicting the hot summer nationwide. WSI's three-month seasonal forecasts have been "skillful" for eight out of the last 12 periods.

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