As the winter heating season gets closer, the AccuWeather.com long-range center continues to drive home the point that a very warm winter is on the way for much of the nation, especially east of the Rockies. If the forecast is confirmed, the natural gas and power markets could be in for lower prices as demand for both commodities lays off.

However, Joe Bastardi, chief long-range meteorologist for AccuWeather.com, said Tuesday the early season call for cold is playing out as planned. He had warned of a reversal in November — that the areas receiving the endless summer in October would be noticeably colder this month relative to normal and probably even below normal in many areas. The recent cold in the East and Great Lakes area is consistent with the original winter forecast, released in October (see Daily GPI, Oct. 24), which called for seasonable winter weather at the beginning and end of the winter with the warmer temperatures dominating what is climatologically the coldest part of the season.

With natural gas storage inventories sitting at an all-time record level of 3,545 Bcf, bullish natural gas market traders needed significant cold this winter to put any kind of upward pressure on prices. If last year serves as any sort of a blueprint, record storage and a mild winter could be met with declining prices this season. Last year, then-record storage (3,461 Bcf) and a mild winter teamed to do just that. Prompt-month natural gas futures reached a low of $5.740/MMBtu in late December 2006. On Monday, prompt-month natural gas futures closed at $7.961/MMBtu.

The drop in natural gas futures pricing bled over into the power sector last year as lower gas prices resulted in lower power generation prices (see Power Market Today, Dec. 19, 2006).

Temperatures from Minnesota and Iowa to New England and southward into the Carolinas, Tennessee and Alabama reached five to seven degrees above normal for October with many locations finishing with the a top 10 warmest month ever, Bastardi found. However, November has been quite the opposite with temperatures running three degrees below normal from New England to the Carolinas and westward to Ohio and Kentucky. Also, in much of this area, the first snowflakes of the season fell in the first third of the month. More of this is expected later in November and probably into early December, he said.

Despite the early chill in the East and the National Weather Service forecast predicting a colder winter than 2006-2007, Bastardi believes this could rival the winter of 2001-02 for warmth centered in major population areas — mostly the East, South, Midwest and Great Lakes area.

In fact, the only colder than normal areas are forecasted to be in the less populated Pacific Northwest and northern Rockies. Bastardi pointed out that last year the coldest period was centered in the East, during the heart of winter. February was the coldest ever in parts of the Midwest and December was what tipped the scale to warmer than normal over the three-month period. This winter; however, will be warm in most of the nation from the Plains eastward, where much of the population resides, he said.

The major difference between this winter and last winter will be the duration of warmth, Bastardi said. Unlike last winter, when the AccuWeather.com forecast indicated that the warmth of December and early January would turn on a dime, when the warmth returns this December it may last all of the way through February. In fact, in some places, the wildest weather may be over the next three or four weeks and then again in March or April as a late spring may be in the making for much of the East.

Despite his forecast, the meteorologist cautioned that there will still be bouts with major winter events in much of the area that is expected to be very warm. Even in the warmest of winters, cold and snow will enter the picture from time to time — it is just not expected to make an extended stay.

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