Temperatures in the northern and western United States are expected to average colder than normal over the next three months, while the Southeast is likely to see warmer-than-normal temperatures in March and April, according to Andover, MA-based WSI Corp.
The end of a recent "long-lived and extreme North Atlantic blocking episode" and a return to a more typical late winter weather pattern should result in a return of colder weather to the western United States in February, while the East will experience more moderate temperatures, according to WSI Chief Meteorologist Todd Crawford.
"As we head into March, the odds of more widespread cold become more likely as the La Nina event winds down, with below-normal temperatures again becoming more likely into the northeastern U.S.," Crawford said.
WSI is forecasting 1,868 gas-weighted heating degree days for the February-April period, 2-3% more than the 1971-2000 mean value and about 7% higher that February-April 2010, he said.
WSI's forecast for February calls for temperatures to average warmer than normal in the East, South Central and Southwest areas, with colder-than-normal temperatures expected in the Southeast, North Central and Northwest areas. A brief respite from cold temperatures in the South Central and Northeast areas could briefly soften the firm levels that delivered natural gas prices have seen in the Mid-Atlantic and Northeast regions, according to Energy Securities Analysis Inc. senior analyst Chris Kostas.
"Natural gas prices for the New York City area (i.e., TZ6-NY [Transco Zone 6-New York) have averaged above $8.50/MMBtu for much of January, but would likely fall to just below $6.00/MMBtu while the milder temperatures move through," Kostas said in a statement issued in conjunction with WSI's outlook. "Despite the cold weather that has plagued the country for much of the winter so far, natural gas inventories remain robust. Current inventories are 1.9% above the five-year average and 2.8% above last year's level for the same period. These levels should provide ample supply for the cold weather that is expected for the second half of the winter heating season."
But much-colder-than-normal temperatures that are expected to extend from California to Ohio in February should offset the slight decrease in demand associated with the milder temperatures in the Northeast, keeping aggregate gas demand firm, he said.
March will see colder-than-normal temperatures dominating the Northeast, South Central and Southwest areas, with the Southeast becoming the only region in the warmer-than-normal column, WSI said.
Natural gas production in March "will most likely outpace the levels seen in March 2009; offsetting to some degree the reliance on inventoried gas and tempering the increases in withdrawal rates," Kostas said. "Given the forecast for a much-colder-than-normal March, however, we have lowered our estimates for final natural gas storage to the 1,650 Bcf range. Delivered gas prices are likely to be firm at least through the middle of in March as a result of the above-normal late-season heating demand."
WSI's forecast map remains much the same for April, with warmer-than-normal temperatures moving into the South Central area and colder-than-normal temperatures expected to remain in place across the nation's northern tier and in the Southwest.
"While delivered natural gas prices in April will be less sensitive to the colder-than-normal temperatures expected due to seasonal moderation, gas demand will likely be marginally bolstered by the onset of the power generation maintenance period. With an increasing number of coal and nuclear plants using the softer electrical loads in April to perform seasonal refueling and maintenance, natural gas will be used to fill in the gaps left by the offline generators. The colder-than-normal temperatures expected in April would marginally firm electrical loads and underpin on-peak implied market heat rates in PJM, New York and New England as a result," Kostas said.
Some of the gas demand on the West Coast could be offset by abundant hydro generation in the Northwest, which would be driven by above-normal snowpack in the Northern Rockies, according to Kostas.
The WSI forecast is generally in line with one issued last week by AccuWeather.com chief long-range forecaster Joe Bastardi, who said he expects temperatures to continue to average below normal from the northern and central Plains into the East through at least the middle of next month (see Daily GPI, Jan. 24). There may be breaks in the cold weather in February and March, "and then April, I think, is a real tough month in the Northern Plains into the Northeast part of the United States," according to Bastardi, who said this winter could end up being one of the coldest the United States has experienced since the 1980s.
Forecasters at the National Oceanic and Atmospheric Administration have said they expected the La Nina event to bring above-normal temperatures to a huge area stretching from the Rocky Mountains to the Mid-Atlantic through February, but said it was less clear how it would affect winter temperatures in the Northeast (see Daily GPI, Nov. 19, 2010).
WSI is scheduled to issue its next seasonal outlook on Feb. 22.
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