WSI: Coldest Temperatures in North-Central and Northwestern US during January-March Period; Quite Mild in South-Central States

Expect Total US Gas Heating Demand during January-March Period to be 1-2% More Than Both Last Year and 30-Year Averages

Andover, MA, December 21, 2010 — WSI (Weather Services International) expects the upcoming period (January-March) to average warmer than normal across the south-central states and most of the East. Below-normal temperatures are expected across most of the northern and western US, especially in the northern Rockies and north-central US. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

“The recent extreme behavior of the North Atlantic Oscillation, along with the fact that current and recent atmospheric/oceanic patterns have closely resembled those from the 1950s-1970s period, has reinforced our hypothesis that there may have been a fundamental climate shift in 2008 that will result in weather patterns more similar to those found 40-60 years ago,” said WSI Chief Meteorologist Dr. Todd Crawford. “This hypothesis is bearing fruit so far this winter, with an unusually cold December in much of the eastern US, typical of La Nina events in the 1950s.”

“The recent extremely cold pattern in the central and eastern US should moderate a bit as we head deeper into winter, with a more textbook La Nina pattern emerging,” Dr. Crawford added. “The bulk of the cold should retrogress back into the northern Rockies and northern Plains for the remainder of the winter, with milder temperatures becoming established across much of the East. However, although we do expect more seasonal temperatures in the eastern US in January and February, the historically persistent negative phase of the North Atlantic Oscillation suggests that any mild spells may be short-lived. For the January-March period as a whole, we are forecasting 2468 gas-weighted heating degree days, 1-2% higher than both the 1971-2000 mean values and last year.”

In January, WSI predicts regional temperature anomalies as follows:

Northeast* – Warmer than normal
Southeast* – Warmer than normal, except Florida
N Central* – Colder than normal
S Central* – Warmer than normal
Northwest* – Colder than normal
Southwest* – Colder than normal

According to Chris Kostas, Senior Power and Gas Analyst at ESAI, “Slightly decreased heating demand in January is expected along a large swath of the country from Texas through the Mid-Atlantic region and north into New York and New England. The relatively mild temperatures will overlay much of the eastern pipeline corridor including much of the Producing Region and Consuming East, where gas is stored for regional heating demand. As a result, delivered gas prices at Henry Hub and along the East Coast could be relatively soft in January. With colder-than-normal temperatures expected in the Rockies and along the West Coast, however, firm gas prices are expected in the West. With colder-than-normal temperatures on the West Coast and warmer-than-normal temperatures on the East Coast, it is unclear whether the Rockies Express transcontinental pipeline will be sending as much gas from Wyoming to Ohio this year. Electrical loads in ERCOT, PJM, New York and New England for January will also be softer than normal given the relatively mild temperature expectations in these regions. The softer-than-normal power demand should also reduce gas demand for power generation along the East Coast in January.”

In February, WSI sees the monthly breakdown as:

Northeast – Warmer than normal
Southeast – Warmer than normal, except Florida
N Central – Colder than normal
S Central – Warmer than normal
Northwest – Colder than normal
Southwest – Colder than normal

Kostas added, “With slightly reduced heating demand also expected in February for much of the Producing and Consuming regions, healthy storage levels, and widely expected strong natural gas production, delivered gas prices at major trading hubs from Texas to New England could be relatively soft in February. It will be an entirely different story on the West Coast, however, where above-normal heating demand in February is expected. The extended cold spell should keep gas prices firm in California. Electrical loads in ERCOT, PJM, New York and New England in February will be softer than normal given the mild temperature expectations in these regions. The softer-than-normal power demand should also reduce gas demand for power generation along the East Coast in February.”

In March, WSI forecasts:

Northeast – Colder than normal
Southeast – Warmer than normal
N Central – Colder than normal
S Central – Colder than normal
Northwest – Colder than normal
Southwest – Colder than normal

“With much colder-than-normal temperatures expected in all regions except the Southeast, heating demand will pick up significantly to finish the winter. Gas delivery charges, in the form of basis spreads, are typically softer in March, however, when normal temperatures begin to rise. Nonetheless, with widespread cold expected over most of the country, heating demand in March will likely be well above normal, and gas prices could be firm to finish the heating season. Price spikes at Henry Hub in March have only been associated with dwindling inventories, however, and that isn’t expected to occur this year given high inventories to start the winter, strong production associated with new shale gas wells, and only slightly colder-than-normal temperatures overall. Inventories in the Consuming West are likely to draw down the most on a relative percentage basis. West Coast gas prices could be very firm to end the winter heating season as a result,” Kostas noted.

WSI, which provides customized weather information to energy traders, will issue its next seasonal outlook on January 25.

*To view the map defining WSI’s US regions, click here.

About WSI
WSI (Weather Services International) is the world's leading provider of weather-driven business solutions for professionals in the energy, aviation, and media markets, and multiple federal and state government agencies. WSI is a member of The Weather Channel Companies and is headquartered in Andover, Massachusetts with offices in Birmingham, England. The Weather Channel Companies are owned by a consortium made up of NBC Universal and the private equity firms The Blackstone Group and Bain Capital.


About ESAI
Since its inception in 1984, Energy Security Analysis Inc. (ESAI) has been dedicated to monitoring, analyzing, and synthesizing information about world-wide energy markets. Tapping the talents of its senior-level staff, ESAI provides clients with unparalleled insight into where the markets have been and where they are headed. ESAI provides ongoing systematic analysis of energy prices in the oil, natural gas, and energy markets. For more information on ESAI services, see www.esai.com.

Contacts:
Linda Maynard
WSI
(978) 983-6715
lmaynard@wsi.com

Tommy Sutro
Energy Security Analysis, Inc.
(781) 245-2036
tsutro@esai.com

Editorial Contact:
Barbara Rudolph
Rudolph Communications, LLC
(781) 229-1811
bjr@rudolphcommunications.com