WSI: Recent Pattern to Persist Through Fall

Cool Weather from Northern Plains to Southeast with Above-Normal Temperatures in the West and Northeast

ANDOVER, Mass. (August 20, 2013) — WSI (Weather Services International) expects the upcoming fall period (September-November) to be cooler than normal from the northern Plains into the Southeast with above-normal temperatures elsewhere, particularly across parts of Texas and the interior West. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010).
According to WSI Chief Meteorologist Dr. Todd Crawford: “The summer has followed the general pattern established earlier in 2013 of below-normal temperatures extending from the northern Plains into the Southeast, with above-normal temperatures elsewhere. Strangely enough, our latest dynamical and statistical model guidance suggests that this pattern will persist through the fall season. Of course, the large-scale pattern is often modulated by the impact of re-curving tropical cyclones in September and October, and individual paths of these cyclones are unpredictable at long lead times. Because of this, confidence in the fall forecast, as is often the case, is reduced from typical values. Some of our indicators are beginning to suggest that a pattern change toward warmer-than-normal temperatures may occur across the northern Plains in November, so there is a warmer risk to our forecast in that region. A very early look at indicators for the upcoming winter suggest that atmospheric blocking may be favored again this winter, which would favor below-normal temperatures across significant parts of the United States. However, it is still too early to have any reasonable level of confidence in the winter forecast since many of the key drivers don’t reveal themselves until October, which is when our first official winter forecast will be released.”

In September, WSI sees the monthly breakdown as:
Northeast – Warmer than normal
Southeast – Cooler than normal
North Central  – Cooler 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: “Cooler-than-normal September temperatures in the Midwest and Mid-Atlantic regions should help to keep electrical loads below seasonal norms and push power prices and implied market heat-rates lower in PJM and MISO. Delivered natural gas in those regions should also see downward pricing pressure. Considering persistent negative basis prices seen between the Mid-Atlantic region and Henry Hub this past summer, discounts to Henry Hub are likely to increase in duration and magnitude as electrical load and gas demand softens in September. California and Texas on the other hand may see firm power prices and implied market heat-rates in September due to above-normal temperatures expected in those regions. Generator outages will also help to support prices as baseload generators begin their maintenance season. In California, reduced Northwest imports should also help to support power prices as run-of-river hydroelectric generation declines.”

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

Kostas added: “Weather-related energy demand is generally very soft in October. New England can buck the trend as seasonal norms begin to fall, but with warmer-than-normal temperatures expected in that region this October, delivered natural-gas prices may remain soft (especially if Canadian imports increase as expected due to new offshore production at Deep Panuke). Texas could see continued strength in implied market heat-rates in October as nuclear and coal-fired generators conduct maintenance. With aggregate North American heating and cooling demand expected to be soft in October, natural-gas inventories are likely to close the year-over-year deficit by the end of the month. Weak natural-gas demand from the power sector in August coupled with the expected soft demand in September in October should allow inventories to challenge last year’s record. This would be bearish for natural-gas prices in October in particular, and the winter in general, but is dependent on the mild weather forecast for the September/October timeframe.

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

Kostas continued: “Cooler-than-normal mid-Atlantic temperatures are expected to continue into November. Cool November temperatures in this region are supportive of energy demand as declining seasonal norms begin to increase space heating. This should help to lift mid-Atlantic delivered gas prices from the very soft levels we expect in October. The South is expected to be split between cooler-than-normal temperatures in Florida and warmer-than-normal temperatures in Texas. This could help marginally to soften November power prices in Florida but support power prices and implied market heat-rates in ERCOT. Generator maintenance in ERCOT should be complete by the end of the month, however, and should provide a downward bias to implied market heat-rates in that region as the month progresses.”

WSI provides customized weather information to global commodity traders via its industry-leading WSI Trader Web site. WSI will issue its next seasonal outlook September 24. 

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.

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

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