NGI The Weekly Gas Market Report / NGI All News Access

East to Be Spared Summer's Harshest Temperatures

Population centers in the East aren't likely to feel the worst of this summer's heat, according to forecasters at Andover, MA-based Weather Services International (WSI), who said in a three-month forecast issued last week that they expect most of the season's significant temperatures to be felt in the Plains and Rockies.

The forecaster expects July-September to be slightly cooler than normal across the Northeast, California coastal cities and Florida, with mostly above-normal temperatures dominating across the rest of the country.

"So far in June the most significant heat has occurred across the Plains and southern/central Rockies. The major cities of the eastern U.S. have generally been wet and cool, with the exception of the notable, but brief, heat wave at the end of last week," said WSI Chief Meteorologist Todd Crawford. "Heading into July we expect this general pattern to continue, with the biggest heat found in the Plains and Rockies and near to slightly above-normal temperatures across most of the East." Conditions including the emergence of a new El Nino event in the Pacific Ocean have increased the odds for below-normal temperatures across the eastern United States this summer, Crawford said.

And WSI has increased its forecasted July temperatures for Texas, "since it appears that continued atmospheric blocking at higher latitudes will suppress the summer ridge southward," he said.

The first summer heat wave in that region last week. While triple-digit temperatures were expected to drive peak electric demand above 65,000 MW, adequate electric generation resources were available to serve that load, according to the Electric Reliability Council of Texas.

WSI's forecast for July includes warmer-than-normal temperatures in the Northeast, Central and Southwest (except coastal southern California) regions, with cooler-than-normal temperatures expected in the Southeast and Northwest (except coastal areas).

"With natural gas production remaining stubbornly high, gas inventories well above seasonal norms and only slightly warmer-than-normal temperatures expected throughout the country in July; natural gas prices are unlikely to see any significant upside this summer," said Energy Securities Analysis Inc. senior analyst Chris Kostas.

WSI expects cooler-than-normal temperatures to dominate the East and North Central areas in August, while temperatures will average warmer than normal in the South Central and West (except coastal California) areas.

"With cooler-than-normal temperatures expected east of the Mississippi in August, natural gas prices could see some early autumn price weakness, as gas inventories approach last year's record level," Kostas said. "Below normal summer loads usually translate into lower implied market heat rates. But against the backdrop of very low gas prices this year (and increased coal-to-gas switching), implied market heat-rates could be firm as coal-fired generators continue to struggle against efficient gas fired plants in a lower-than-normal electrical load environment," Kostas added.

The WSI forecast for September calls for a return of warmer-than-normal temperatures to the Southeast and cooler-than-normal temperatures in the Southwest.

"Gas prices could soften in September as inventories exceed last year's record level and approach 4,000 Bcf," Kostas said. "Although we don't expect inventories will reach 4,000 Bcf until October, it isn't out of the question that this level could be breached as early as mid-September."

The Energy Information Administration (EIA) last week reported an increase in inventories of 57 Bcf. For the week ending June 28, working inventories totaled 3,063 Bcf, according to EIA's Weekly Natural Gas Storage Report, a 653 Bcf increase compared to last year and 613 Bcf above the 2007-2011 average. EIA has said it expects that inventory levels at the end of October will set a new record high at 4,096 Bcf.

WSI is scheduled to issue its next seasonal outlook on July 24.

©Copyright 2012 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