Andover, MA-based WSI Corp. said last week it expects the July-September period to average warmer than normal temperatures for a vast majority of the U.S., with the exception of parts of the East Coast, which should experience "close to normal" conditions.
Referencing a standard 30-year normal (1971-2000), the forecasting firm in it latest seasonal outlook said the eastern U.S. should be spared the worst of the heat. "We appear to be on our way to another warm summer as normal tropical Pacific Ocean temperatures, a warm Atlantic, and a severe drought in the Plains, Rockies, and Southwest will combine for very warm temperatures in the western two-thirds of the U.S.," said WSI seasonal forecaster Dr. Todd Crawford. "The East will be milder, with near-normal temperatures in most locations for the upcoming three months."
Looking at WSI's monthly breakdown, forecasters see July as being warmer than normal throughout the country with the exception of the Northeast, which is expected to experience cooler than normal conditions except for Pennsylvania and New Jersey. Especially warm conditions during the month are expected in Oklahoma and Kansas.
Breaking down WSI's forecast for July, Energy Security Analysis Inc. (ESAI) said the mild outlook for New England and New York will moderate power prices in that region and the lower chance of "significant heat events" means that price spikes would be not as likely. "With only slightly above-normal temperatures throughout the southern half of the U.S. and a cooler Northeast, the demand for natural gas from the power sector will be normal and natural gas injections to storage are likely to be near average levels," ESAI said. "This is directionally bearish for natural gas prices as natural gas inventories remain at very high levels for this time of year."
Despite the break in July, WSI said the Northeast is expected to heat up come August. The region is forecast to experience warmer than normal temperatures along with the western and central portions of the country, while the Southeast is expected to see cooler than normal conditions.
"The warmer August outlook in the western markets is bullish for power prices due to higher loads and the higher likelihood of heat events," ESAI said. "Warmer weather in August tends to increase the likelihood of forced outages due to operational stresses following high operating levels in June and July. Higher demands for power in the West are bullish for energy prices in California and will also increase natural gas demand. Cooler weather in the Southeast should provide some offset to overall natural gas demand."
By the time September rolls around, WSI said all the regions of the country are expected to see warmer than normal conditions for the month, especially Wisconsin, Michigan, Texas, Louisiana and Arkansas.
"The supply balance for natural gas is more likely to be influenced by hurricane activity than by incremental demand due to warmer temperatures in September," ESAI advised. "If hurricane activity is normal (no extended production losses), natural gas inventories will reach storage capacity by October, leaving four-to-six weeks in which the market may be oversupplied."
WSI, which provides customized weather information to energy traders, said an update to the July-September forecast would be issued on Thursday with the August-October forecast to be issued on July 18.
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