WSI Energycast Seasonal Outlook Calls for Warm West, Slightly Cooler-than-Normal East this Winter

WSI expects the following monthly trends:

• In January, cooler-than-normal temperatures are expected in most of the eastern two-thirds of the US. Coolest temperatures, relative to normal, are expected from the central Plains to the Southeast. Warmer-than-normal temperatures are expected in California, Southwest, Pacific Northwest, and northern New England. The largest positive temperature anomalies are expected in the Southwest.

• In February, warmer-than-normal temperatures are expected in all locations, with the exception of most of the northern tier of states, where slightly below-normal temperatures are expected. Warmest temperatures, relative to normal, are again expected in the Southwest.

• In March, warmer-than-normal temperatures are expected from the Rockies westward, as well as the northern and central Plains, Great Lakes, and Ohio Valley. Warmest temperatures, relative to normal, are still expected in the Southwest. Colder-than-normal temperatures are expected in the East, Southeast, and Gulf Coast states. Coldest temperatures, relative to normal, are expected in the Northeast.

According to WSI seasonal forecaster Dr. Todd Crawford, “We expect plenty of Arctic air in the eastern two-thirds of the country in January. We differ from CPC strongly in our cold northern Plains forecast, where they predict above-normal temperatures. We also expect the January-March period to average colder-than-normal in the Northeast, while CPC is predicting equal chances of above- and below-normal temperatures.”

Effects in the Marketplace
WSI’s forecast indicates colder-than normal temperatures in most of the eastern U.S. in January. The colder weather across most of the major gas-consuming regions will be bullish for natural gas prices in January. Offsetting this bullish January consumption however, is the warmer-than-normal outlook for February in all but a few extreme northern locations. This will temper January price increases.

In March, warmer-than-normal temperatures in the Plains and Midwestern states will offset higher consumption in the colder than normal Eastern states. Most important for prices will be the likelihood of ample inventories in March as a result of the early season buildup and warmer temperatures in December and February. The outlook for adequate end-season inventories will dampen price volatility and should prove bearish for prices, particularly during February. Power prices will be closely linked to gas in the Eastern states and thus should be moderated by the lessened potential for extended gas price spikes.

WSI successfully predicted (1) a cool 2003 summer in the Southeast and mid-Atlantic, (2) a cold ‘02-‘03 winter in the Southeast, and (3) a warm ’02-’03 winter in the Pacific Northwest,. Their three-month seasonal forecasts have been skillful for 8 out of the last 12 periods. A skillful seasonal forecast is defined as one that is closer to what is actually observed than a forecast using the 30-year average temperature.

WSI, which provides customized weather information to energy traders, issues its Seasonal Outlook twice monthly. The next forecast will be issued on January 13.

About WSI
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.wsienergycast.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.