WSI Expects Warm Spring Across the South, Cool West and Northeast

New El Nino Event Possible Heading into Summer

Andover, MA, February 21, 2012 — WSI (Weather Services International) expects the upcoming period (March-May) to average colder than normal across much of the western US and parts of the Northeast, with above-normal temperatures elsewhere. The WSI seasonal outlooks now reference a standard 30-year normal (1981-2010).

“As we head into the spring season, most of our objective guidance suggests a general pattern of cooler-than-normal temperatures across parts of the northern and western US with above-normal temperatures across the South,” said WSI Chief Meteorologist Dr. Todd Crawford. “This is consistent with a waning La Nina event. Further, if there continues to be a general lack of North Atlantic atmospheric blocking, the warmer-than-normal temperatures will be more significant and more widespread across the eastern US this spring. Finally, we may see an El Nino event developing later in the spring into early summer, although there is still significant uncertainty. Historically, developing El Nino events have been associated with generally cooler summers across much of the US. While it is still too early to have a lot of confidence about the summer forecast, the potential for El Nino along with relatively cooler North Atlantic Ocean waters does imply that another hot summer may be less likely.”

In March, WSI sees the monthly breakdown as:
Northeast* – Cooler than normal
Southeast * – Warmer than normal
N Central* – Warmer than normal
S Central* – Warmer than normal
Northwest* - Cooler than normal
Southwest* – Cooler than normal

According to Chris Kostas, Senior Power and Gas Analyst at ESAI, “Given the outlook for mild temperatures throughout much of the country in March, Henry Hub natural gas prices will likely finish the winter heating season at very depressed levels. Natural-gas inventories will likely finish the withdrawal season above 2,000 Bcf. While cooler-than-normal temperatures in the Northeast should marginally support delivered gas prices in New York and New England, with supplies widely expected to be plentiful, the price impact of these cooler temperatures should be minimal. Power and gas prices in PJM and MISO will likely remain depressed, and coal-to-gas switching will continue to be a major factor as coal-fired generators struggle to compete against their gas-fired peers. Colder-than-normal temperatures are expected along the West Coast in March. But with inventories in that region running 35% above the five-year average, the price impact of this slightly higher-than-normal springtime heating demand will be muted. Warmer-than-normal temperatures in Texas should be slightly bearish for electrical demand and power prices there.”

In April, WSI forecasts:
Northeast – Warmer than normal
Southeast – Warmer than normal
N Central – Warmer than normal
S Central – Warmer than normal
Northwest – Cooler than normal
Southwest – Cooler than normal

“Even though mild temperatures are expected east of the Rockies in April, weather-related demand is typically very low during this period. Mild temperatures and robust inventories (to begin the summer injection season) should keep natural gas prices soft through April. Generation maintenance will likely combine with low gas prices and coal-to-gas switching to boost implied on-peak market heat rates particularly in ERCOT, MISO and PJM (where coal is typically a major baseload component). Power prices are likely to remain relatively soft in those regions, however, given the low-priced gas environment that we expect,” Kostas noted. “Cooler-than-normal temperatures west of the Rockies should have minimal impact on energy prices as seasonal energy demand in the region is typically very low. With widespread mild temperatures expected throughout much of the country in April, natural gas prices are likely to remain depressed through early spring.”

In May, WSI forecasts:
Northeast – Cooler than normal
Southeast – Warmer than normal
N Central – Cooler than normal
S Central – Warmer than normal
Northwest – Cooler than normal
Southwest – Warmer than normal, except coastal southern CA

“While slightly cooler-than-normal temperatures are expected along the West Coast and the northern tier of the country in May, weather-related demand in those regions this time of year is typically very soft. As a result, the price impact of cooler temps in the West and North is likely to be minimal in May,” Kostas added. “Warmer-than-normal temperatures across the southern tier of the country, however, will likely spur some early cooling demand. Although generation maintenance typically wraps up by mid-May in the South, warmer-than-normal temperatures and higher-than-normal cooling demand could be the spark that producers are looking for to lift gas prices out of the basement and start the summer off on a bullish note.”

WSI, which provides customized weather information to energy traders, will issue its next seasonal outlook on March 20.

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

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.

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