WSI: Cold January to Roll Right into February

No Sign of Any Sustained Warm-Ups for Next Few Weeks

ANDOVER, Mass. (January 16, 2015) — WSI (Weather Services International) has issued their latest forecast for the February-April period. The forecast indicates below-normal temperatures will be generally prevalent in the eastern half of the US, especially in February, with above-normal temperatures expected in the western US. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010).

According to WSI Chief Meteorologist Dr. Todd Crawford: “Cold weather has returned in January as expected, with below-normal temperatures observed across most of the eastern two-thirds of the nation. We originally expected a spell of much warmer temperatures during late January, but it now appears that this will not occur, as another cold spell will set in as we head into February. The impacts from the weak El Nino event are already waning, allowing for a pattern similar to last year to set up for the last half of winter. Further, the recent sudden stratospheric warming event may be altering the pattern to favor colder risks as well for the remainder of winter.”

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

According to Chris Kostas, Senior Power and Gas Analyst at ESAI Power LLC: “With slightly colder-than-normal temperatures expected east of the Rockies, and much colder-than-normal temperatures expected over the Northeast, North American aggregate natural-gas demand should be strong in February. Demand centers like New York City and pipeline-constrained regions like New England should experience natural-gas price strength as a result of the colder-than-normal temperatures. Natural-gas price spikes in New York City and New England have been subdued this year, however, due to the significant decline in fuel oil prices. Low-sulfur residual fuel oil is currently trading below $10.00/MMBtu and provides for gas-demand reduction by means of fuel switching in these regions. Natural-gas inventory withdrawals should be strong due to the colder-than-normal February temperatures, though year-over-year production gains should offset some of the effects of the cold on withdrawals. Significant gains in year-over-year production should also temper the effects of cold weather on Henry Hub prices (the EIA recently reported U.S. marketed production was 5.4 Bcf/day, or 7.5%, higher than year ago levels). Henry Hub prices have become somewhat insulated from Northeast winter temperatures, with Marcellus price points trading at significant discounts to Henry Hub during periods of mild temperatures this winter; a winter price phenomenon that was unheard of as recently as two years ago. With colder-than-normal temperatures expected in February, we expect a bullish, though somewhat muted, effect on Henry Hub prices. ”

In March, WSI forecasts:
Northeast – Warmer than normal
Southeast – Colder than normal
North Central – Warmer than normal west
South Central – Colder than normal
Northwest – Warmer than normal
Southwest – Warmer than normal west, cooler east

Kostas added: “Warmer-than-normal temperatures in the Northeast and Mid-Atlantic region should soften regional gas prices with discounts to Henry Hub expected to show up early this spring. We expect daily Marcellus-gas prices will be negative in March at most Midwest delivery points even if monthly average temperatures are slightly colder-than-normal in the region. Heating demand typically fades quickly during the second half of the month, which should also help to keep monthly-average gas prices subdued in most regions. Henry Hub prices should remain soft despite the colder-than-normal temperatures that are expected in the Gulf States in March (as energy demand become less sensitive to temperatures).”

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

Kostas noted: “Mild temperatures in April should help to push Henry Hub prices lower. Energy demand is typically very soft in April as heating demand declines in the North. Very low delivered-gas prices are expected in the Northeast and Mid-Atlantic region as a result of the mild temperatures. The retirement of a number of coal-fired generators this April (due to the new mercury emissions standards that come into effect mid-month), should have a slightly bullish effect on natural-gas demand later in the month as gas-fired generators are called on more often to supply power to the grid, however.”

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 February 20.

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