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WSI: Fading El Nino to Leave Northeast Warmer Than Normal

October 29, 2012
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Temperatures over the next three months should average above normal across most of the eastern two-thirds of the United States, a weather pattern that would keep a lid on natural gas consumption in population centers in the Northeast, according to forecasters at Andover, MA-based Weather Services International (WSI).

The apparent end of an El Nino event -- the warming of water temperatures in the central and equatorial Pacific Ocean -- will make the November-January period cooler than normal across the northwestern quarter of the country and parts of the Southeast, WSI said.

"It is now clear that the previously expected El Nino event is dead on arrival heading into the winter season," said WSI Chief Meteorologist Todd Crawford. "We do not expect any of the 'classic' El Nino weather impacts in the U.S. this winter. In fact, our forecast looks more like what would be considered a La Nina winter, with the coldest temperatures across the northwestern half of the country and a generally mild winter across much of the eastern U.S. We expect that the strongest signal this winter will be for cold Alaskan high pressure to direct cold Arctic air southward into western Canada and the northwestern U.S., with warmer southerly flow in control over much of the eastern U.S."

The National Oceanic and Atmospheric Administration (NOAA) recently cited El Nino's retreat in its forecast of warmer-than-average temperatures across an area stretching from Arkansas west through Arizona and north as far as the Canadian border (see NGI, Oct. 22). Most of the rest of the United States can expect temperatures to average about normal from December through February, NOAA said.

"The biggest wild card heading toward winter is the degree of atmospheric blocking in the North Atlantic, typically referred to as the North Atlantic Oscillation (NAO)," Crawford said. "Over the last few winters there have been wild swings in the NAO, from historically strong blocking winters (2009-10 and 2010-11) and very cold eastern U.S. temperatures, to historically weak winters (2011-12) with record warm temperatures. Recent climate model forecasts and statistical predictors generally suggest that Atlantic blocking will be the exception rather than the rule this upcoming winter, and we feel that the odds are tilted towards another mild winter across much of the eastern U.S."

Temperatures in November are expected to be warmer than normal in the Southwest and South Central United States, and slightly warmer than normal in the Northeast, but will be cooler than normal in the Southeast, North Central and Northwest areas, WSI said.

"Warmer-than-normal temperatures in the Northeast and the Great Lakes region in November will reduce early-season heating demand in those major gas-centric regions," according to Energy Securities Analysis Inc. senior analyst Chris Kostas. "Heating demand in California is also expected to be below normal. While above-normal heating demand can be expected in the Northwest and Southeast regions (offsetting some of the effects of the mild Northeast temperatures), we expect below-normal heating demand in North America on balance.

"Mild Consuming Region temperatures should allow for storage injections to continue well into November. Inventories are widely expected to top out near 4,000 Bcf (well above last year's record 3,851 Bcf). Gas prices should remain soft as a result of soft heating demand and ample supplies."

The only change in WSI's temperature forecast map for December is the Northeast moving firmly into the warmer-than-normal category. With mild temperatures expected to stretch from Texas to New England, delivered gas prices are likely to remain subdued heading into winter, Kostas said.

"Northeast natural gas basis prices typically begin to increase delivered gas prices in December. However, with mild weather, robust inventories and continued growth of Marcellus shale gas production this year; Northeast basis prices are expected to be very soft, relative to historic averages," Kostas said. "New England could be the exception, however, as Algonquin Citygates basis pricing has been demonstrating seasonal strength, due to the growing dependence on natural gas for power generation.

"Power prices in MISO, PJM and New York are likely to be soft as a result of mild early-winter power demand and weak delivered gas prices. Power and gas prices are also likely to be soft in ERCOT in December as a result of the mild temperatures expected in Texas."

By January warmer-than-normal temperatures will dominate all of the Lower 48 except in the Northwest, which is expected to remain colder than normal, according to the WSI forecast.

"Gas prices are likely to be relatively soft in January considering the warmer-than-normal temperatures that are expected for the eastern two-thirds of the country," Kostas said. "In addition, with mild temperatures generally expected for the first two months of the withdrawal season, natural gas inventories in underground storage are likely to remain above the five-year average through the first half of the withdrawal season.

"Delivered Northeast gas prices (which are typically supported by transportation costs in January) should be soft as a result of lower basis pricing. Cooler weather west of the Rockies will increase gas demand in the Consuming West, but won't completely offset the decrease in gas demand in the Consuming East and Producing Region. Power prices in ERCOT, MISO, PJM and New York are likely to be soft as a result of the mild temperatures and soft gas prices expected in January."

Last week the Energy Information Administration (EIA) reported a build of 67 Bcf and a total of 3,843 Bcf in storage, which was which was 153 Bcf more than a year ago and 251 Bcf more than the five-year average.

An EIA official recently said he expects gas demand for electricity generation this winter to be about the same as it was last winter (see NGI, Sept. 17). The power burn will likely be 2.5-2.6 Tcf, and the amount of coal-fired generation capacity that is used during the winter months will depend on natural gas prices, EIA Deputy Administrator Howard Gruenspecht said.

Households heating with natural gas will spend an average of 15% more this winter than last year due to a relatively colder heating season, slightly higher residential gas prices and an increase in demand, according to the Energy Information Administration (see NGI, Oct. 15). Winter was unseasonably warm last year, resulting in little additional demand and weak prices.

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