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WSI: Cold Start to Eastern Winter May Fade by January

Temperatures across the United States over the next three months will be a decidedly mixed bag, with early cold in central and eastern areas expected to fade in the first days of 2014, according to forecasters at Weather Services International (WSI).

"As the first shot of significant cold air spurs above-normal heating demand across much of the eastern United States, there are many questions regarding its staying power in the weeks and months ahead," said WSI Chief Meteorologist Todd Crawford. "While we do foresee colder-than-normal temperatures across the Midwest into the mid-Atlantic and Southeast in November and potentially into early December, there is a risk of much milder temperatures heading into the New Year, especially across the western and southern United States.

"Beyond that time, the fate of the late-winter pattern is dependent upon the presence (or lack) of a sudden stratospheric warming event, which severely disrupts the strength of the polar vortex and sharply increases the odds of colder weather heading into February."

WSI's gas-weighted heating degree day forecast numbers for November are 3% higher than the 1981-2010 average but are slightly lower than normal for December, January and February, Crawford said.

On average, WSI expects the next three months to be slightly colder than normal from the northern Plains and Great Lakes into the Southwest, with above-normal temperatures elsewhere.

In November, colder-than-normal temperatures will dominate in the North Central and the southern portion of the Northeast, including the New York to Washington, DC, corridor, WSI said. The rest of the country can expect temperatures to average warmer than normal during the month.

"Colder-than-normal temperatures in the Midwest and Mid-Atlantic in November will boost natural gas demand and energy prices following the mild temperatures and subdued prices of early October," according to Energy Securities Analysis Inc. Senior Analyst Chris Kostas. "Stronger regional demand should also help to lift delivered gas prices in the Mid-Atlantic region from the very soft levels seen in early October. Generator maintenance is expected to be in full swing to begin the month, which will also boost natural gas demand and help to firm power prices and implied market heat rates.

"New York and New England may be spared from significantly higher regional prices, however, as warmer-than-normal temperatures are expected in those markets. Delivered gas prices for TZ6-NY will likely be soft, given the mild November outlook. Algonquin Citygates prices in New England have been firm over the past 12 months, but with mild temperatures expected in November and increased gas production at Deep Panuke, spreads to Henry Hub will likely be softer than those seen last November."

WSI's temperature forecast map for December is lopsided, with only the Southeast and Northwest expected to average colder than normal. That mixed picture should result in below-normal aggregate heating demand and stable natural gas pricing, Kostas said.

"Prices at Tetco M3 in PJM and TZ6-NY in New York City in particular could be subdued as a result of the mild temperatures in those regions," he said. "In New England, Algonquin Citygates prices have been very firm, with forward price expectations above $9.00/MMBtu for December (compared to below $4.00/MMBtu for Henry Hub). If New England temperatures come in warmer than normal in December (as WSI expects), power and gas prices should clear well below forward-price expectations in that region."

Warmer-than-normal temperatures will dominate in January, with only the northernmost portions of the Northeast and North Central expected to see temperatures averaging colder-than-normal. Gas prices, according to Kostas, could be relatively soft as a result.

Moderate natural gas and power prices, adequate gas storage inventories and growing natural gas production are all positive signs as colder weather approaches, Federal Energy Regulatory (FERC) staff told the Commission recently (see Daily GPI, Oct. 17). With the exception of localized spikes during periods of high demand, natural gas prices aren't expected to increase significantly this winter, according to FERC's Winter 2013-2014 Energy Market Assessment.

Early forecasts have painted a picture of a generally mild winter this year. The National Oceanic and Atmospheric Administration is expecting a normal winter over the eastern consuming region. Forecasters at the Farmers' Almanac, on the other hand, expect the winter will be colder than normal for most of the United States, including New England, a forecast that would have furnaces working overtime in some of the nation's largest population centers (see Daily GPI, Aug. 27).

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