In a new forecast, Andover, MA-based WSI Corp. said last week that it expects the Northwest and the Pacific Coast of California to average colder than normal over the next three months while a majority of the southern U.S. and the East see warmer than normal readings.

If the forecast holds up, delayed home-heating demand in the East could allow natural gas storage levels to reach well above the traditionally accepted 3.2 Tcf full level. As of last week’s Energy Information Administration storage report for the week ended Sept. 22, there is already 3.254 Tcf in underground storage with five weeks remaining in the traditional injection season.

On the power generation side, Wakefield, MA-based Energy Security Analysis Inc. (ESAI) said the bullish impact of generating facility maintenance during the period should be offset by low load demand.

“We have recently seen a rather pronounced cooling in the northern Pacific Ocean that is typically incompatible with an emerging El Nino event in the tropics,” said WSI seasonal forecaster Todd Crawford. “Because of this, and based on our objective seasonal models, we now expect the first part of the heating season to be relatively warm in much of the southern and eastern U.S., and cool in the Northwest. This would be a relatively unusual result for an El Nino event, but we feel that the northern Pacific signal will exert more of an influence on U.S. weather patterns, at least through December.”

Referencing a standard 30-year normal from 1971-2000, WSI said conditions in the U.S. in October are expected to be warmer than normal through the East, south central and Southwest portions of the country, with the exception of Utah and Colorado. The Northwest and north central portions of the country — except Wisconsin, Illinois and Michigan — are expected to experience cooler than normal conditions for the month.

In analyzing WSI’s October-December forecast, ESAI said the warmer outlook in the Northeast for October will delay an early start to the heating season and moderate gas demand. However, the firm noted cooler weather in the north central and Northwest may increase demand for heating, particularly in the latter part of the month, which may offset lower demand in the Northeast.

“Power prices will have bullish impacts from planned generator maintenance, but low load levels in October will keep prices in check,” ESAI said. “Natural gas inventories could end the injection season at record highs if the hurricane season continues to progress without any damage to infrastructure in the Gulf.”

The arrival of November should bring even more warmth to the country, according to WSI. With the exception of Florida, the entire East and central portions of the country along with the Southwest are expected to be warmer than normal during the month, leaving the Northwest feeling a little bit of chill.

“A warmer November may provide an extension of the natural gas injection season into mid-November, as heating demand would be low,” ESAI surmised. “This would be very bearish for cash natural gas prices — inventories may already be at record levels by the end of October. Seasonal maintenance at power plants and nuclear plant refueling will continue into November and will have bullish impacts on power prices, although weather-related demand will have less influence.”

December will bring a mixed bag according to WSI, which predicts most northern states will be cooler than normal, with the exception of Pennsylvania, New Jersey, Wisconsin, Illinois and Michigan. The entire southern U.S. is expected to be warmer than normal for the month.

ESAI said colder temperatures in the northern half of the country during December would be tend to be very bullish for natural gas prices “as the market tends to see a cold December as a harbinger of cold weather in January and February.” However, the firm pointed out that with very high natural gas inventories likely at the start of winter, cold weather in December is less likely to make the markets nervous about end of winter supplies. ESAI expects power prices in the Northeast markets will receive a bullish boost from higher loads if temperatures are cooler than normal in December.

The next WSI forecast (for November-January) will be issued on Oct. 17.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.