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WSI Calls for August to Be 'Warmer Than Normal' Throughout U.S.

August 1, 2005
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And the heat just keeps on coming, according to the latest forecast released by Andover, MA-based WSI Corp., which calls for a warmer than normal August for the entire U.S., but a cooler than normal Northeast in September and October.

For the overall three-month period from August through October, the weather forecasting firm expects temperatures to average below normal in the Great Lakes, Northeast, and Mid-Atlantic states, with above normal temperatures elsewhere.

"August should be another warm month across the U.S., especially in the South," said WSI seasonal forecaster Dr. Todd Crawford. "Our models indicate a sharp transition to cooler weather in the East by late September and October, however."

In its monthly breakdown, WSI said the entire U.S. should be warmer than normal, with Mississippi, North Dakota, Minnesota, Texas, Washington and Oregon experiencing significantly warmer than normal conditions.

In conjunction with the WSI forecast, Energy Security Analysis Inc. (ESAI) pointed out that higher temperatures in July have been pushing peak power loads to record highs in many areas of the country, and the current WSI outlook indicates that periods of hot weather and very high load conditions will continue into August.

"Higher temperatures and [power] loads will be bullish for electric prices as higher cost units are required to meet loads during peak days," according to Paul Flemming of ESAI. "With an increased likelihood of major heat event results due to the warmer outlook, there is a concern that generator failures may be more prevalent in August after going through extended operations in July."

Flemming noted that higher power sector demand for natural gas will also result from the warmer weather. "Injections to storage have been running slightly below the five-year average, although total storage levels are quite high for July," he said. "Higher temperatures in August will extend the trend of lower than normal injections to storage."

September will still see most of the country warmer than normal except for in the Northeast, Oklahoma and Kansas, which are expected to be cooler than normal. With cooler weather in the Northeast, Flemming said electric loads will be lighter and the likelihood of a late season heat event diminishes. ESAI said this will be bearish for power prices in the Northeast. The company added that gas demand from the power sector should ease during September and allow for higher injections to storage, possibly resulting in lower prices for natural gas, especially if storage levels look to reach maximum capacity well before the end of October.

In October, WSI is calling for cooler than normal temperatures in the East and Central regions of the country, while the West is expected to remain warmer than normal.

ESAI said the cooler-than-normal outlook in the eastern areas means that electric loads will be lower during the peak of the maintenance season. The impact of generator maintenance outages "should be" less pronounced under lower load conditions, the company said. The cooler outlook could lower injections of natural gas to storage towards the end of the month as heating demand could kick in early.

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