NGI The Weekly Gas Market Report / NGI All News Access

WSI Still Sees Chilly Winter Ahead for Eastern States

Adding weight to the near-consensus winter forecast, Andover, MA-based WSI Corp. said the next three months will bring cooler-than-normal temperatures to the East and South Central United States, with above-normal temperatures dominating the West and North Central regions. Based on its forecast and population-weighting algorithms, WSI said it expects gas and electricity demand this winter to be about the same as last year.

"The combination of the current El Nino event, abundant Eurasian snow cover and a favorable pattern of ocean temperatures in the Atlantic Ocean suggest that this winter will be a cold one in the eastern U.S., especially after the new year," said WSI seasonal forecaster Todd Crawford. "There are even indications that a significant pattern change will occur in late November and that December may be colder than we are currently forecasting."

WSI's forecast for December calls for a warmer-than-normal temperatures in the Northeast and North Central regions, with colder-than-normal temperatures across the rest of the country.

In a statement issued in conjunction with WSI's outlook release, Paul Flemming, Energy Security Analysis Inc. (ESAI) director of power and gas, said the warmer northern temperatures will moderate the demand effects of cooler temperatures in the South and West.

"Lower electrical loads and gas demand for heating in much of the northern regions will result in lower-than-normal gas demand in these regions. Delivered gas prices in the West should firm as temperatures in the region swing from above normal in November to below normal in December," Flemming said.

By January colder-than-normal temperatures will have settled in east of the Mississippi River and in Texas, while warmer-than-normal temperatures will take over in the West, WSI said.

"With record natural gas inventories entering the winter, the expected colder-than-normal January in the consuming East could help to balance supply by lowering inventories at the end of the heating season," Flemming said. "High fuel oil prices will discourage switching away from gas in the power sector except when delivered basis prices are very high in congested areas such as in New York or New England. The effect of this large fuel oil-to-gas spread is supportive of local gas demand, particularly in the Northeast, and delivered gas prices. In the West, warmer-than-normal temperatures should moderate January regional gas and power prices."

WSI's temperature forecast remains the same into February, with significantly colder-than-normal temperatures continuing to grip the East.

"Combined with higher loads in the power sector, gas demand in February could be bullish for prices despite adequate inventories. Warmer-than-normal temperatures in the western states are not likely to result in a complete offset to the higher gas demand in the East," Flemming said.

WSI's outlook was in line with forecasts issued by the National Oceanic and Atmospheric Administration (NOAA) and AccuWeather.com Chief Long Range Forecaster Joe Bastardi (see NGI, Oct. 19). NOAA and Bastardi each called for colder weather across portions of the East in coming months, and each said the nation's winter weather will be significantly affected by El Nino. But NOAA said it expected the current El Nino -- the warming of surface temperatures in the central and eastern equatorial Pacific Ocean -- to strengthen and persist through the winter, while Bastardi said El Nino will fade over the same period.

Turning its back on "group think" winter weather forecasts, WxRisk.com last month said it expects the Midwest -- not the East -- to experience the coldest temperatures relative to normal this winter (see NGI, Nov. 2).

The WSI seasonal outlooks reference a standard 30-year norm (1971-2000). The next WSI forecast, for January-April, is scheduled to be issued Dec. 22.

©Copyright 2009 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