WSI Calls for Cold Winter in Eastern US, Especially After New Year

WSI and ESAI Say Total Energy Usage Should Be Similar to Last Winter, Reducing Gas Inventories

Andover, MA - November 24, 2009 — WSI expects the upcoming period (December-February) to average cooler than normal in the eastern and south-central US, with above-normal temperatures common across the western and north-central US. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

“The combination of the current El Nino event, abundant Eurasian snow cover, and a favorable pattern of ocean temperatures in the Atlantic Ocean suggest that this winter will be a cold one in the eastern US, especially after the New Year” said WSI seasonal forecaster Dr. Todd Crawford. “There are even indications that a significant pattern change will occur in late November and that December may be colder than we are currently forecasting. Based upon our forecast and our population-weighting algorithms, we expect total gas and electricity demand to be of similar magnitude to last year’s cold winter.”

In December, WSI predicts regional temperature anomalies as follows:

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

According to Paul Flemming of ESAI, “The WSI December forecast shows warmer-than-normal temperatures in the Northeast and North Central regions with cooler-than-normal temperatures in the southern regions. The warmer northern temperatures will moderate the demand effects of cooler temperatures in the South and West. Lower electrical loads and gas demand for heating in much of the northern regions will result in lower-than-normal gas demand in these regions. Delivered gas prices in the West should firm as temperatures in the region swing from above-normal in November to below-normal in December.”

In January, WSI sees the monthly breakdown as:

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

“For January, WSI is forecasting colder-than-normal temperatures east of the Mississippi and in Texas. With record natural gas inventories entering the winter, the expected colder-than-normal January in the Consuming East could help to balance supply by lowering inventories at the end of the heating season. High fuel oil prices will discourage switching away from gas in the power sector except when delivered basis prices are very high in congested areas such as in New York or New England. The effect of this large fuel-oil-to-gas spread is supportive of local gas demand (particularly in the Northeast) and delivered gas prices,” said Paul Flemming. “In the West, warmer-than-normal temperatures should moderate January regional gas and power prices.”

In February, WSI forecasts:

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

“In February, WSI is forecasting significantly colder-than-normal temperatures in the Eastern US and Texas. These regions represent a large portion of the country’s gas demand, and overall demand could be significantly higher than normal for a second month in a row. Combined with higher loads in the power sector, gas demand in February could be bullish for prices despite adequate inventories. Warmer-than-normal temperatures in the Western states are not likely to result in a complete offset to the higher gas demand in the East,” according to Paul Flemming. “Warmer-than-normal temperatures in the Western regions should moderate both gas and power prices.”

WSI, which provides customized weather information to energy traders, will issue its next seasonal outlook (for the January-April period) on December 22.

About WSI Corporation

WSI is the most trusted source of weather information across the globe. Top insurance, risk management companies and financial institutions, worldwide, trust WSI to supply them with easy-to-use, timely and expert weather guidance to help anticipate market volatility, mitigate risk and make critical decisions with confidence. 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. For more information, please visit us on the web at www.wsi.com or call us at 877.WSI.CORP or +44.121.233.7600.

About ESAI Corporation

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 visit www.esai.com.