WSI: Early March Cold Followed by Warm Remainder of Spring Much of Central/Eastern US

Monitoring Plains Drought as Approach Summer

ANDOVER, Mass. (February 26, 2013) — WSI (Weather Services International) expects the March-May period to be colder than normal across much of the western United States. Above-normal temperatures will be common across the central and eastern United States, especially in the Northeast and southern Plains. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010).

According to Dr. Todd Crawford, WSI chief meteorologist:
“After a very mild December, the winter has gradually gotten colder with the help of a very
strong stratospheric warming event and associated polar vortex breakdown. This breakdown has allowed very cold Arctic air to flow southward and impact many parts of the United States during recent weeks. Further, the northward transfer of tropical air enabled by recent strong “nor’easter” winter storms have likely triggered atmospheric blocking in the North Atlantic sector heading into early March. This blocking will favor very cold conditions during at least the first week of March across many eastern U.S. locations. However, we expect a pattern flip as we head deeper into spring with much warmer temperatures becoming established across much of the central and eastern U.S. Finally, unless there is significant relief from the long-term central U.S. drought during the next couple of months, the odds of summer heat emerging earlier than usual in many central and eastern U.S. locations is significantly enhanced.”

In March, WSI sees the monthly breakdown as:
Northeast* – Warmer than normal
Southeast* – Colder than normal
North Central * – Slightly warmer than normal
South Central* – Colder than normal
Northwest* – Colder than normal
Southwest* – Colder than normal

According to Chris Kostas, senior power and gas analyst at Energy Security Analysis, Inc. (ESAI):
“The risk of a generally cold start to March could help to support natural gas and power prices, particularly in the Northeast where delivered gas prices have been very firm this winter. Henry Hub natural gas prices are likely to finish the winter very subdued due to robust supplies. While colder weather is expected west of the Rockies and in the Pacific Northwest, aggregate North American gas demand should finish the winter heating season very soft; this could help to soften natural gas prices from their current levels. With natural gas production expected to remain strong through the winter, a mild March should leave natural gas inventories above 2,000 Bcf again this year. ESAI is currently forecasting an end-of-season inventory level near 2,100 Bcf. This level is moderately higher than market consensus (of around 2,000 Bcf) and well above the 5-year average. Soft heating demand and below-normal electrical loads in March also increase the downside risk profile for power and gas prices in MISO and PJM. New York and New England power prices, which have been very firm due to strong natural gas basis pricing this winter, will soften in March. Implied market heat rates are likely to firm in all of these regions, however, as generator maintenance increases through the month and marginal coal units begin to be priced-out of the market again on soft gas prices, lower electrical loads, and poor economics.”

In April, WSI forecasts:
Northeast – Warmer than normal
Southeast – Warmer than normal
North Central – Warmer than normal
South Central – Warmer than normal
Northwest – Colder than normal
Southwest – Warmer than normal, with exception of coastal California

More from ESAI’s Kostas:
“While weather-related demand is in April is low, with mild temperatures expected for nearly the entire country (except the Northwest and parts of California), aggregate North American gas demand should begin the spring season very soft. The much warmer-than-normal temperatures expected in parts of Texas, however, could boost early cooling demand in ERCOT. With gas demand low in March and April and robust inventories expected to begin the injection season we believe natural gas prices are likely to remain soft and stable in April. Henry Hub gas price volatility is likely to remain relatively low in April as well, though implied market heat rates are likely to firm as generation maintenance continues to increase throughout the month.”

In May, WSI forecasts:
Northeast – Warmer than normal
Southeast – Warmer than normal
North Central – Warmer than normal
South Central – Warmer than normal
Northwest – Colder than normal
Southwest – Warmer than normal, with exception of coastal California

More from ESAI’s Kostas:
“While weather related demand is generally soft in early May, the warmer than normal temperatures expected in Texas and the Southeast will likely boost cooling demand and electrical loads in these regions. Generator maintenance in these regions should begin wrapping up by mid-month, however. Increasing electrical load due to growing cooling demand by the end of the May should help to firm implied market heat rates, particularly in ERCOT. In PJM and the Northeast, on the other hand, warmer than normal temperatures do not usually have a significant effect on electrical loads. Generator maintenance in PJM and the Northeast could help to magnify any marginal strength in electrical demand, however. While power prices are likely to remain subdued throughout the country due to relatively low natural gas prices, implied market heat rates are likely to firm as gas-fired generation continues to steal market share from struggling coal-fired generators.”

WSI provides customized weather information to global commodity traders via its industry-leading WSI Trader Web site. WSI will issue its next seasonal outlook on March 26.

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

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.


Contact:
Melissa Medori, The Weather Company
melissa.medori@weather.com

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