WSI Energycast Outlook Calls for Hot Temperatures Building Eastward in August
WSI and ESAI issue an update of special interest to energy traders
Andover, MA, July 24, 2007 - WSI Corporation issued the seasonal outlook for the upcoming three-month period (August-October) on July 17. WSI expects the upcoming three-month period to average warmer than normal in all locations except for the Pacific coastal cities, parts of Texas, and the extreme northern tier of states. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).
The monthly breakdown follows:
In August:
- Northeast - Cooler than normal, except NJ/PA
- Southeast -Warmer than normal
- N Central - Warmer than normal
- S Central - Cooler than normal
- Northwest - Warmer than normal
- Southwest - Warmer than normal
Expected Market Impact (provided by ESAI)
The WSI August forecast indicates cooler-than-normal temperatures in the
Northeast and South Central regions, lowering the outlook for power sector
gas demand and significantly lowering the expectations for extended heat
events in these areas. The warmest temperatures are expected in the North
Central and Southwest regions which will have less impact on overall gas
demand. The overall moderate outlook for temperatures across the country
will moderate gas demand for cooling, and inventories should continue
to build upon the current high levels through August. Power prices in
the Northeast RTOs and Texas should be moderate with lower load expectations
due to the cooler-than-normal forecast.
In September:
- Northeast - Warmer than normal
- Southeast - Warmer than normal
- N Central - Warmer than normal
- S Central - Warmer than normal, except eastern TX
- Northwest - Cooler than normal
- Southwest - Warmer than normal, except CA
Expected Market Impact (provided by
ESAI)
The WSI September forecast indicates slightly warmer-than-normal temperatures
across much of the country with cooler-than-normal temperatures expected
in California, the Northwest and parts of Texas. Cooler weather in California
and Texas will have a bearish impact on natural gas demand from the power
sector, while slightly warmer weather in the Northeast will result in
only marginal offsetting demand increases. Overall, natural gas demand
in September should be neutral to bearish for gas prices. The cooler outlook
in California diminishes the likelihood of late-season extended heat events
and the occurrence of associated power price spikes.
In October:
- Northeast - Warmer than normal
- Southeast - Warmer than normal
- N Central - Colder than normal
- S Central - Warmer than normal, except KS
- Northwest -Colder than normal
- Southwest - Warmer than normal
Effects in the Marketplace (provided
by ESAI)
The WSI October forecast indicates colder-than-normal temperatures across
the North Central and Northwest regions. However, most other regions are
expecting warmer-than-normal temperatures, indicating that early season
heating demand for natural gas in October should be low to moderate. Power
demand will be less dependent upon temperature swings in the shoulder
demand month of October. Energy prices will be influenced more heavily
by planned generator maintenance outages than by the moderate load swings
influenced by changes in temperature.
According to WSI seasonal forecaster Dr. Todd Crawford, “It appears that the western heat will finally make progress to the east in August, especially across the north-central and Great Lakes states. There is still significant uncertainty regarding the sustainability of the heat in the Northeast, however. Meanwhile, the Southeast has transitioned to a cooler, wetter pattern in July, and it will likely be difficult to get significant heat there as well. Texas should remain relatively cool, as the wet ground will continue to drive the pattern and keep temperatures down and precipitation values up.”
WSI, which provides customized weather information to energy traders, issues its seasonal outlook twice-monthly. An update to the current forecast will be issued on July 26, with the next new forecast package (for September-November) issued on August 14.
About WSI Corporation
WSI Corporation 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 headquartered in Andover, Massachusetts
with offices in Birmingham, England, and is a wholly owned subsidiary of Landmark
Communications. More information about WSI can be found at www.wsi.com.
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
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