Forecasters are expecting a warmer-than-average winter this year, but prolonged periods of cold temperatures could still trigger regional pipeline constraints in New York City, Boston and Los Angeles and increase the risk of price volatility, according to the 2018-2019 Winter Energy Market Assessment released Thursday by FERC’s Office of Enforcement (OE).

A bomb cyclone last winter drove cash prices north of $100/MMBtu in the Northeast. If similar conditions materialize this winter, “pipeline constraints on Algonquin Gas Transmission, Transcontinental Pipeline, and Tennessee Gas Pipeline could result in high gas prices at Transco Zone 6 near New York City, Algonquin Citygates in ISO New England Inc., and Transco Zone 5 South in PJM Interconnection LLC,” OE said.

The National Oceanic and Atmospheric Administration (NOAA) said in a separate winter outlook also released Thursday that it expects warmer-than-normal conditions across much of the northern and western United States. An El Nino event, which often signals wetter-than-average weather in the southern United States and drier conditions in parts of the North, is also likely to develop during the next few months, according to Mike Halpert, deputy director of NOAA’s Climate Prediction Center.

“The last winter that was impacted by El Nino was back in 2015-2016,” Halpert said. “Many may remember that episode as one of the strongest of the past 60 years, and some might even recall that the winter of 2015-2016 was the warmest winter on record for the continental United States. However, we’re not anticipating a repeat of that winter, as this El Nino is expected to be much weaker than that one.”

Basis futures prices are up 47 cents/MMBtu in New York City and $3.40/MMBtu in Boston compared with the same time last year, OE said, suggesting “a market expectation that both regions may face pipeline transportation constraints this winter.” A 13-cent increase in basis futures price at Dominion South — a point representative of the Marcellus Shale region — “is likely a result of recent increases in pipeline takeaway capacity out of the region leading to a reduction of the local natural gas production surplus.” Basis futures are also up compared with last year at Southern California Border and Southern California Citygates, OE said.

At the same time, basis futures dropped at Chicago Citygates to 10 cents/MMBtu this year from 32 cents/MMBtu in 2017, likely a result of increased supply associated with commercial operations starting on the Rover pipeline.

In its own Winter Fuels Outlook, released last week, the Energy Information Administration (EIA) said it expects Henry Hub prices during December, January and February to average $3.20/MMBtu, an 8% increase based on increased gas use in the electric power sector, growing natural gas exports from liquefied natural gas (LNG) facilities, and lower-than-average inventory levels.

On Thursday, EIA reported an 81 Bcf injection into storage inventories for the week ending Oct. 12, larger than both last year’s 55 Bcf injection and the five-year average build for the week of 79 Bcf. The build lifted storage inventories to 3,037 Bcf, 601 Bcf below year-ago levels and 605 Bcf below the five-year average. EIA has projected 3,308 Bcf to start the withdrawal season, a 12.7% decrease from last year’s level, with storage decreasing to 1,354 Bcf by the end of the withdrawal season.

Whether or not those predictions are accurate, of course, depends on how cold winter temperatures turn out to be, along with two other standard determinants: natural gas production and demand levels.

“Deviations from the forecasted winter weather could have a large impact on withdrawals and the end-of-season storage levels,” OE said. “Continued high production levels should moderate price risk associated with lower-than-average storage inventory. However, should natural gas demand and LNG exports be higher than expected, this impact may be offset.”

Strong production levels are offsetting lower natural gas storage levels, according to the American Gas Association’s Richard Meyer, managing director of energy analysis.

“We continue to see robust supply that is well positioned to serve customer needs. These trends could speak to an evolution of how utilities and others make strategic use of natural gas storage,” Meyer said.

Demand exceeding even that of the polar vortex that slammed the country five years ago will be satisfied by soaring production this winter, resulting in flat pressure on prices compared to winter 2017-2018, according to the Natural Gas Supply Association (NGSA). NGSA expects below-average storage inventories, but forecast production and flexibility in the market that will allow the market to satisfy demand.