WSI: Northeast US Cold Early and Late in Winter; More Consistent Cold in North-Central Region; Very Warm in South-Central States

WSI and ESAI Expect Total US Heating Demand during November-January and December-February periods to be within 3% of Last Year and within 1% of 30-Year Averages

Andover, MA, October 26, 2010 — WSI (Weather Services International) expects the upcoming period (November-January) to average warmer than normal across most of the southern US and the Northeast, with below-normal temperatures expected in the north-central and northwestern states, as well as parts of the Southeast. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

“The strong La Nina event combined with the persistent negative phase of the North Atlantic Oscillation should result in a cold period across much of the north-central and northwestern states through the end of fall and winter, with a very mild winter expected in the south-central US. In the eastern US, we expect aggregate seasonal temperatures closer to normal, with the best chances for cold occurring early and late in the winter. January appears to be the most likely month for any extended warmth across the eastern US,” said WSI Chief Meteorologist Dr. Todd Crawford. “However, the historically persistent negative phase of the North Atlantic Oscillation suggests that any mild spells may be short-lived this winter across the East.” For the November-January and December-February periods as a whole, we are forecasting 2469 and 2692 gas-weighted heating degree days, respectively, both within 1% of the 1971-2000 mean values. The November-January value is 3% larger than last year’s value, while the December-February value is 3% less than last year’s value.”

In November, WSI predicts regional temperature anomalies as follows:

Northeast – Warmer than normal
Southeast – Colder than normal
N Central – Warmer than normal
S Central – Warmer than normal
Northwest – Cooler than normal
Southwest – Warmer than normal, except coastal California

According to Paul Flemming, Director of Power and Gas at ESAI, “In November, WSI is forecasting warmer-than-normal temperatures across most of the country with the exception of the Southeast and Northwest regions where cooler temperatures are expected.” According to Flemming, “Electric loads will be representative of shoulder-season temperatures and the outlook for warmer-than-normal temperatures will have less impact on load. Planned generator maintenance will be high in early November in most markets and will decline towards the end of the month. Power prices will be more reflective of this planned maintenance than on weather factors. Warmer temperatures are likely to delay that start of the heating season for natural gas demand, however, increased gas demand due to planned coal and nuclear outages will provide some offset to weaker heating demand.”

In December, WSI sees the monthly breakdown as:

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

“WSI is forecasting colder-than-normal temperatures in December across the northern tier of the country, where the bulk of natural gas heating demand exists. Early-season cold weather can often generate concern over whether the winter as a whole will be abnormally cold, creating a potential for large drawdown on gas inventories. This should be very bullish for natural gas prices as the heating season gets underway in strong fashion, however, any price increases are likely to be tempered by the large start of season inventory levels.”

In January, WSI forecasts:

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

“WSI is forecasting colder-than-normal temperatures across the North Central and Western regions of the country and warmer than normal temperatures in the east.” Flemming notes that, “Warmer weather in the Northeast is slightly bearish for natural gas demand from the heating and power sectors and this lower demand is likely to be offset by higher demand in the North Central region which relies heavily on gas for heating.” Flemming adds, “Power prices in the Northeast markets are likely to be slightly bearish due to lower loads and also due to the expectation of lower gas basis spreads to the Henry Hub based upon the warmer weather outlook. Slightly warmer weather in the southern and Gulf states will not provide much offset to heating demand in the North.”

WSI, which provides customized weather information to energy traders, will issue its next seasonal outlook (for the December-February period) on November 23.

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. More information about WSI can be found at www.wsi.com.

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