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WSI: Northeast Colder Than Normal Through January

The U.S. northern tier will be colder than normal over the next two months, with the northern Rockies and northern Plains in line for especially cold conditions, and Arctic air is expected to be a "frequent guest in [the] largest gas-demand population centers," according to forecasters at Andover, MA-based Weather Services International (WSI). Above-normal temperatures are expected across the southern United States over the next three months, the forecasters said.

"Currently, we do not expect the kind of frequent atmospheric blocking in the North Atlantic (otherwise known as the negative NAO) that would result in more extreme and more widespread cold in the eastern U.S.," said WSI Chief Meteorologist Todd Crawford. "However, trends in some of the long-lead indicators suggest that this assumption may be challenged, and that the risk to the forecast in the eastern U.S. is towards the colder side."

The forecasters expect temperatures to average colder than normal across the northern tier (except northern New England) in December, with warmer-than-normal temperatures dominating across the South. The WSI temperature forecast map for January remains unchanged, except that northern New England is expected to experience the same colder-than-normal average temperatures as the rest of the northern tier.

"With WSI's shift towards cooler expectations in December, we now expect natural gas prices to be supported heading into winter," according to Energy Securities Analysis Inc. senior analyst Chris Kostas. "Natural gas prices are often supported in December, as expectations for even colder temperatures in January defer discretionary withdrawals from storage. We expect this seasonal tendency will likely occur this year. Heating demand along much of the northern tier of the country is expected to run above normal in December (and January). The upside to prices may be limited, however, as inventories and production rates are strong heading into the winter heating season...

"While heating demand is expected to run below normal in the southern two-thirds of the country in January, cooler than normal temperatures are expected in the North. The cooler Northern temperatures and above-normal heating demand in the North Central and Northeast regions should more than offset the reduced demand of the South. Gas prices are likely to be firm during the coldest temperature periods, but with robust supplies (i.e. high inventory levels and strong production rates) price spikes are likely to be limited in both magnitude and duration. New England and portions of eastern New York will likely experience very sharp price spikes in January, however."

By February, warmer-than-normal temperatures will move into the Northeast and Northwest, leaving only the North Central area forecast to experience colder-than-normal temperatures, WSI said. An increase in natural gas demand in the North Central region should more than offset below-normal demand in the South and West, Kostas said.

"Typically, Mid-Atlantic gas basis prices would surge under these circumstances. But with new shale gas supplies in Pennsylvania, Tetco M-3 prices should be modest (with only temporary prices spikes)," Kostas said. "The slightly above-normal aggregate heating degree days expected in the U.S. should help to rebalance inventories and gas prices (which finished last winter at record high and low levels, respectively). While the colder than normal temperatures expected in the Mid-West will increase power and gas demand in the region, the upside should be limited. Coal-fired generation that has been sidelined due to poor economics may find some breathing room to increase run rates. Under these circumstances, increased coal-fired generation should help to limit gains in both power and gas prices this winter."

A continuation of the drought that began this summer in the nation's midsection could help keep temperatures in the region low this winter, and has the potential to trigger a repeat of 2010-2011's wellhead freeze-offs, according to a 2012-13 Winter Outlook recently released by Earth Networks-WeatherBug (see NGI, Nov. 19). WeatherBug expects temperatures through February to average about normal for most of the eastern United States, including all of the Northeast population centers. The Ohio Valley will also see near-normal temperatures, but could be slightly colder than normal late in the winter, the forecasters said.

Like WSI, WeatherBug said it expects the Northern Plains, Northern Rockies and Washington state will experience temperatures averaging below normal throughout the winter months, but WeatherBug said the Great Lakes should see above-normal temperatures through January, with more moderate temperatures taking over after that.

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 Energy Information Administration (EIA) said last month it expects U.S. households -- one-half of which use natural gas as their primary heating fuel -- to spend an average of $89 more this winter, reflecting a 1% increase in the average residential price from last winter and a 14% hike in consumption if near-normal (cold) temperatures materialize for the upcoming winter (see NGI, Oct. 15). Winter was unseasonably warm last year, resulting in little additional demand and weak prices.

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