Cooler-than-normal temperatures are expected to persist across much of the country for the remainder of the summer months, with above-normal heat expected to linger in a handful of Southeast and western states, according to forecasters at Weather Services International (WSI).
An "atmospheric forcing" from the tropical Pacific is expected to keep temperatures cool across the North Central and Northeast regions by late July, said WSI Chief Meteorologist Todd Crawford.
"To date, the summer pattern has consisted of southwestern heat, cool temperatures across the northern Rockies and northern Plains, and alternating warm and cool spells across the southern Plains and the East," Crawford said. "Our latest forecast models suggest that this general pattern will persist through the summer, with increasing odds of below-normal temperatures across the North Central and northeastern U.S., and better chances of above normal temperatures across the Pacific Northwest."
The cooling trend was already projected to push July natural gas lower on Monday (see Daily GPI, July 23), but with aggregate North American natural gas demand expected to be tame through September, it could aid the summer storage build, which has help to offset some of the uncertainty over injections in the coming months and northern pricing points (see Daily GPI, June 4).
"Natural gas prices in the Northeast and Midwest will continue to see significant discounts to Henry Hub due to mild weather demand and continued production growth from the Marcellus Shale gas region," said Energy Securities Analysis Inc. Senior Analyst Chris Kostas. "Robust natural gas injections should help offset some of the Northeast price weakness and allow storage levels to improve relative to last year, however."
By August, though, Kostas said cooler temperatures in the PJM and MISO markets will help keep down power prices and leave market heat-rates relatively soft, while reduced electrical loads are likely to subdue natural gas prices in the Northeast and Mid-Atlantic relative to Henry Hub. Kostas added that the mild temperatures forecasted through September for both the Midwest and eastern states will allow natural gas inventories to continue recovering from record withdrawals last winter.
At the same time, warmer-than-normal temperatures in the west and much of the south are expected to firm up power prices and market heat-rates.
"Firm power prices resulting from warmer-than-normal temperatures are possible in northern California, eastern Texas and across the south," Kostas said. "Warmer-than-normal temperatures in the South and cooler-than-normal temperatures in the Midwest could also help keep Henry Hub prices firm relative to Marcellus price points."