WSI Corp. said that the eastern and southern parts of the country are expected to experience a “cold period,” while the western and northern areas of the U.S. should see warmer than normal temperatures on average from November through January.

“After a relatively mild November, we expect colder-than-normal temperatures to develop in the East and ridging and warmer-than-normal temperatures in the West,” said WSI seasonal forecaster Todd Crawford. “We expect a pattern somewhat similar to the winter of 2002-03, although we do expect this pattern to emerge somewhat later than it did in 2002, when the pattern for the winter had locked in by late October.”

In the monthly breakdown, WSI is calling for warmer than normal temperatures for most of the country, except for a majority of the Southeast and South Central portions of the country, which will be cooler than normal.

WSI pointed out that while November is a shoulder demand period for power and natural gas, demand can pick up on cooler weather. “The warmer-than-normal outlook for November in most regions should dampen any early season demand effects and should be slightly bearish for the natural gas and power markets,” the company said.

December is expected to bring cooler than normal temperatures for the Northeast, Southeast and South Central portions of the country, with the North Central, Northwest and Southwest regions logging mostly warmer-than-normal temps.

“As the natural gas market shifts to a concerted [storage] drawdown mode, above-normal heating demand in December could cause the market concern over higher rates of drawdown for natural gas,” WSI said. “This is bullish as the market could take this as indicative of a longer-term trend.”

While the forecaster noted that high natural gas inventories should help to moderate the effects of this concern, other trading effects have overshadowed storage fundamentals. “Higher oil prices due to heating oil concerns as well as higher natural gas prices will translate directly into higher power prices.”

January is expected to be almost a carbon copy of temperatures experienced in December. However, New England is expected to be especially cooler than normal, while Washington, Oregon, Arizona and California are expected to be especially warmer than normal.

“In the more demand-intensive Northeast and North Central states, WSI’s forecast for cooler-than-normal temperatures is bullish for natural gas demand,” WSI said. “Any extended periods of cold weather could cause delivered natural gas prices [basis spreads] to soar due to local pipeline transmission constraints. Power prices will move higher on the back of any fuel price increases, however, winter peak demand is typically significantly lower than summer peak demand.”

WSI’s forecast agreed on most points with the outlook recently released by the National Oceanic and Atmospheric Administration (NOAA) (see related story). The U.S. winter outlook from NOAA for December-February continues to call for warmer-than-normal conditions across the entire West and Alaska and cooler-than-normal conditions in the Southeast and Mid Atlantic. Elsewhere, including the key gas consuming markets in the Midcontinent/Midwest and New England, there are equal chances of above, below or normal temperatures.

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