February will be colder than normal in the East and Central U.S., but warmer-than-normal temperatures are expected to move into the Northeast beginning in March, easing energy demand for heating in some of the nation's largest population centers, according to forecasters at Weather Services International (WSI).
"Cold weather has returned in January as expected, with below-normal temperatures observed across most of the eastern two-thirds of the nation," said WSI Chief Meteorologist Todd Crawford. "We originally expected a spell of much warmer temperatures during late January, but it now appears that this will not occur, as another cold spell will set in as we head into February. The impacts from the weak El Nino event are already waning, allowing for a pattern similar to last year to set up for the last half of winter. Further, the recent sudden stratospheric warming event may be altering the pattern to favor colder risks as well for the remainder of winter."
WSI expects warmer-than-normal temperatures to dominate in the West next month, while temperatures will average colder than normal across the rest of the nation.
"With slightly colder-than-normal temperatures expected east of the Rockies, and much colder-than-normal temperatures expected over the Northeast, North American aggregate natural gas demand should be strong in February," said Energy Securities Analysis Inc.'s Chris Kostas, senior power and gas analyst. "Demand centers like New York City and pipeline-constrained regions like New England should experience natural gas price strength as a result of the colder-than-normal temperatures. Natural gas price spikes in New York City and New England have been subdued this year, however, due to the significant decline in fuel oil prices...
"Henry Hub prices have become somewhat insulated from Northeast winter temperatures, with Marcellus price points trading at significant discounts to Henry Hub during periods of mild temperatures this winter; a winter price phenomenon that was unheard of as recently as two years ago. With colder-than-normal temperatures expected in February, we expect a bullish, though somewhat muted, effect on Henry Hub prices."
The Northeast and North Central areas should move into the warmer-than-normal category in March, while colder-than-normal temperatures continue to dominate the Southeast and South Central, WSI said.
"Warmer-than-normal temperatures in the Northeast and Mid-Atlantic region should soften regional gas prices with discounts to Henry Hub expected to show up early this spring," Kostas said. "We expect daily Marcellus gas prices will be negative in March at most Midwest delivery points, even if monthly average temperatures are slightly colder than normal in the region."
The WSI temperatures forecast map remains the same for April, and those mild temperatures are likely to help push Henry Hub prices lower, Kostas said.
"Very low delivered gas prices are expected in the Northeast and Mid-Atlantic region as a result of the mild temperatures. The retirement of a number of coal-fired generators this April (due to the new mercury emissions standards that come into effect mid-month) should have a slightly bullish effect on natural gas demand later in the month as gas-fired generators are called on more often to supply power to the grid, however."
According to scientists at the National Oceanic and Atmospheric Administration (NOAA), 2014 was the hottest year on record globally, the third time that record has been set in the last decade. The average temperature across land and ocean surfaces worldwide was 1.2 degrees above the 20th century average. And last month was the hottest December on record, nearly 1.4 degrees warmer worldwide than the 20th century average, NOAA said. It was the sixth month of 2014 to set a monthly high temperature record.