WSI: Early Cold in Central and Eastern U.S. May Fade Heading Deeper into Winter

Below-Normal Temperatures Expected to be More Widespread Across the Central and East Early in the Heating Season, with Increasing Warm Risks by January

ANDOVER, Mass. — WSI (Weather Services International) expects the upcoming fall period (November-January) to be slightly colder than normal from the northern Plains and Great Lakes into the Southeast with above-normal temperatures elsewhere, particularly across parts of Texas and the Southwest. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010).

According to WSI Chief Meteorologist Dr. Todd Crawford: “As the first shot of significant cold air spurs above-normal heating demand across much of the eastern United States, there are many questions regarding its staying power in the weeks and months ahead. While we do foresee colder-than-normal temperatures across the Midwest into the mid-Atlantic and Southeast in November and potentially into early December, there is a risk of much milder temperatures heading into the New Year, especially across the western and southern United States. Beyond that time, the fate of the late winter pattern is dependent upon the presence (or lack) of a sudden stratospheric warming event, which severely disrupts the strength of the polar vortex and sharply increases the odds of colder weather heading into February. Our gas-weighted heating-degree-day forecast numbers are 3 percent higher than the 1981-2010 normals in November, but are then slightly lower than normal for December, January and February.”



In November, WSI sees the monthly breakdown as:
Northeast* – Warmer than normal north, colder than normal south (including New York to Washington, D.C., corridor)
Southeast* – Colder than normal
North Central * – Colder than normal
South Central* – Warmer than normal
Northwest* – Warmer than normal
Southwest* – Warmer than normal

According to Chris Kostas, senior power and gas analyst at ESAI Power LLC: “Colder-than-normal temperatures in the Midwest and Mid-Atlantic in November will boost natural-gas demand and energy prices following the mild temperatures and subdued prices of early October. Stronger regional demand should also help to lift delivered gas prices in the Mid-Atlantic region from the very soft levels seen in early October. Generator maintenance is expected to be in full swing to begin the month, which will also boost natural-gas demand and help to firm power prices and implied market heat-rates. New York and New England may be spared from significantly higher regional prices, however, as warmer-than-normal temperatures are expected in those markets. Delivered gas prices for TZ6-NY will likely be soft given the mild November outlook. Algonquin Citygates prices in New England have been firm over the past 12 months, but with mild temperatures expected in November and increased gas production at Deep Panuke, spreads to Henry Hub will likely be softer than those seen last November. Generator maintenance will be complete by the end of the month and should provide a downward bias to implied market heat-rates as the month progresses.”



In December, WSI forecasts:
Northeast – Warmer than normal
Southeast – Colder than normal
North Central – Warmer than normal
South Central – Warmer than normal
Northwest – Colder than normal
Southwest – Warmer than normal

Kostas added: “A mixed picture is developing for December. While slightly colder-than-normal temperatures and firm energy demand are expected in the Northwest and Southeast, warmer-than-normal temperatures and mild seasonal demand are expected over the major demand centers of the Northeast and Great Lakes regions. As a result, below-normal aggregate heating demand and stable natural-gas pricing is expected in December. Prices at Tetco M3 in PJM and TZ6-NY in New York City in particular could be subdued as a result of the mild temperatures in those regions. In New England, Algonquin Citygates prices have been very firm with forward price expectations above $9.00/MMBtu for December (compared to below $4.00/MMBtu for Henry Hub). If New England temperatures come in warmer than normal in December (as WSI expects), power and gas prices should clear well below forward-price expectations in that region.”



In January, WSI forecasts:
Northeast – Colder than normal north, slightly warmer than normal in major population centers
Southeast – Warmer than normal
North Central – Colder than normal north, slightly warmer than normal south (including Chicago)
South Central – Warmer than normal
Northwest – Warmer than normal
Southwest – Warmer than normal

Kostas continued: “Natural-gas prices could be relatively soft in January considering the forecast for above-normal temperatures and below-normal heating demand over most of the U.S. Combined with ESAI’s expectation of incrementally higher natural-gas production in January, the unseasonably mild temperatures could push January prices well below the current expectation of $4.00/MMBtu at Henry Hub. Softer gas prices could lead to incrementally higher implied market heat-rates, particularly in the Northeast.”

WSI provides customized weather information to global commodity traders via its industry-leading WSI Trader Web site. WSI will issue its next seasonal outlook, including the first comprehensive look at winter, on November 26.


*To view the map defining WSI’s U.S. regions, click here: http://www.wsi.com/news-scheduled-forecast-releases.htm




About WSI Corporation
WSI (Weather Services International) and Weather Central are the world’s leading providers of weather-driven business solutions for professionals in the energy, aviation, insurance and media markets, as well as multiple federal and state government agencies. Together they comprise the professional division of The Weather Company and 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.