Temperatures in the Southeast are likely to remain warmer than normal through April, but much of the rest of the country will be dominated by colder-than-normal temperatures for the next three months, according to forecaster WSI Corp. of Andover, MA.
"The general pattern of cold-north and warm-south observed during the winter so far will generally continue into early spring," said WSI seasonal forecaster Todd Crawford. "The warmest temperatures, relative to normal, will be in the south-central and southeastern states while the coldest temperatures will continue to be observed in the north-central states. The cold Pacific Ocean suggests that the upcoming aggregate three-month period will be relatively cold nationwide, relative to normal, especially in March and April. An incipient stratospheric warming event, which appears to be historic in magnitude, may continue to favor more Arctic air masses in [the] mid-latitudes and increases confidence in the widespread cold forecast of the U.S. these upcoming few months."
In its Energycast Outlook for February WSI forecast colder-than-normal temperatures across the country's northern tier of states and warmer-than-normal temperatures throughout the South.
Energy Security Analysis Inc. (ESAI) said it expects higher basis pricing to keep power prices firm in New York, New England and PJM, though heat rates are likely to soften due to fuel switching. Relatively low prices for fuel oil have had an impact on implied market heat rates in those regions during recent periods of basis strength. With inventory levels in the Consuming West at 12% above the five-year average, soft basis pricing is likely to continue at western hubs, though prices may firm from the depressed prices of January, ESAI said.
By March colder-than-normal temperatures will have settled across all of the country except the Southeast, which will remain warmer than normal, and Arkansas and Louisiana, WSI said.
As a result, natural gas prices at Henry Hub are likely to remain subdued through the end of the withdrawal period, while basis pricing in the Northeast is likely to remain firm, ESAI said. With inventory levels in the Consuming East at a 6% deficit to the five-year average and with a colder-than-normal February expected, natural gas basis to the Northeast will likely remain firmer than normal in March. Although slightly colder-than-normal temperatures are expected along the West Coast, abundant inventories in California will keep prices moderate. California power prices should remain subdued in March as a result, according to ESAI.
In April the Southeast (except Mississippi) will remain warmer than normal and warmer-than-normal temperatures will return to the South-Central region, but colder-than-normal temperatures will continue to dominate the rest of the country, according to WSI. Aggregate natural gas demand for April will likely be higher than normal and, with heating demand lingering in New York and New England, power prices may be firm despite the lower electrical loads of the shoulder period, ESAI said.
Despite WSI's expectation of predominantly colder-than-normal temperatures in the Consuming East and the Consuming West over the next three months, ESAI said it expects year-over-year increases in North American natural gas production capacity to leave inventories at healthy levels at the end of the withdrawal season. ESAI currently expects ending stocks of around 1,500 Bcf; though that number could be higher because fuel switching for power generation will play a larger role this winter than it has over the past two years.
The WSI forecast was generally in line with a recent National Oceanic and Atmospheric Administration (NOAA) forecast, which predicted that developing La Nina conditions -- the cooling of ocean surface temperatures off the western coast of South America, which have been found to disrupt normal weather patterns in the United States -- would likely continue into spring, potentially bringing below-average temperatures to the Pacific Northwest and above-average temperatures across much of the South at least until March (see NGI, Jan. 12). Above-average precipitation in the Ohio and Tennessee valleys and below-average precipitation across the South, particularly the Southwest and Southeast, can also be expected, according to NOAA.
The WSI seasonal outlooks reference a standard 30-year norm (1971-2000). The next forecast, for March-May, is scheduled to be issued Feb. 24.
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