As the winter heating season gets closer, forecasters -- government and private -- are still in agreement that a very warm winter is on the way for much of the nation, especially east of the Rockies. If the forecasts are confirmed, the natural gas and power markets could be in for lower prices as demand for both commodities lays off.

Forecasts from AccuWeather.com and the National Oceanic and Atmospheric Administration's (NOAA) Climate Prediction Center released last week continue to call for above normal temperatures for the United States during the 2007-2008 winter heating season.

However, before winter gets going, the country is currently going through a little bit of a frost. Joe Bastardi, chief long-range meteorologist for AccuWeather.com, said last week 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 NGI, Oct. 29), 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.

Predictions of a colder winter are good or bad depending on whether you are a bear or a bull on natural gas futures prices. With natural gas storage inventories hitting an all-time record high this year, bullish natural gas traders need significant cold this winter to put any kind of upward pressure on prices. Last year, then-record storage (3,461 Bcf) and a mild winter combined to pressure prompt-month natural gas futures to a low of $5.740/MMBtu in late December 2006. This year, an all-time record storage level of 3,545 Bcf was recorded for the week ended Nov. 2. Prompt-month natural gas futures prices settled at $8.001/MMBtu on Friday.

Likewise, the power generation segment of the industry also saw price weakness due to the warmer-than-normal 2006-2007 winter. Lower gas prices resulted in lower power generation prices in some regions of the country (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 their 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.

NOAA forecasters, in their final update to the U.S. winter outlook, said they "remain confident" in predicting above-average temperatures for much of the country -- including southern sections of the Northeast -- and below-normal precipitation for the southern tier of the nation. Above-average precipitation is still anticipated for the Pacific Northwest, and in the Great Lakes and Tennessee Valley. The government agency said its final update is much like its late October prediction see (NGI, Oct. 22).

"La Nina strengthened during October, making it even more likely that the United States will see below-average precipitation in the already drought-stricken regions of the Southwest and the Southeast this winter," said Michael Halpert, deputy director of the Climate Prediction Center. "Recent sea surface temperatures indicate we have moderate La Nina conditions in place over the equatorial Pacific, which we expect to continue into early 2008."

On average, for December through February 2008, NOAA seasonal forecasters predict that temperatures are expected to be above average in the Mid-Atlantic states and southern sections of the Northeast in response to the long-term warming trend. La Nina favors drier-than-average conditions along the Mid-Atlantic coast. As always, snowfall for the region will depend on other climate factors, which are difficult to anticipate more than one to two weeks in advance.

Other findings include:

For the country as a whole, NOAA said its heating degree day forecast for December through February projects a 4% warmer winter than the 30-year normal, which is very similar to last winter.

"Although we are expecting a warmer-than-normal winter, we do believe there will be fluctuations of warm weather and typical winter weather throughout the season," said Edward O'Lenic, chief of forecast operations at NOAA's Climate Prediction Center. "We encourage people to review winter weather risks for their particular area and information available online (http://www.nws.noaa.gov/om/winter/index.shtml) to help keep them safe when events do occur."

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