WSI Energycast Seasonal Outlook Calls for Warm Southeast, Cold Northern Rockies/Plains during February-April

WSI expects the following monthly trends:

• In February, warmer-than-normal temperatures are expected in most of the East, Plains, and Southwest. Cooler-than-normal temperatures are expected in the Northwest, as well as parts of the Great Lakes and Northeast.

• In March, warmer-than-normal temperatures are expected in most of the East, along with the southern Plains and the Southwest. Colder-than-normal temperatures are expected in the Northwest and New England.

• In April, cooler-than-normal temperatures are expected in the northern half of the US. Slightly warmer-than-normal temperatures are expected in the southern half of the US.

According to WSI seasonal forecaster Dr. Todd Crawford, “Most of the bitter Arctic air will remain in Europe and Asia for much of February, leaving many US locations mild, especially in the Southeast. Our forecast for the upcoming period is quite different from CPC, which depicts cooler-than-normal temperatures in the Southeast and warmer-than-normal temperatures in much of the West.”

Effects in the Marketplace
WSI’s forecast indicates warmer-than normal temperatures in most of the eastern U.S. in February and March, however, colder-than-normal temperatures in much of the Northeast and upper Midwest will be a bullish factor for natural gas prices. Northeast power prices should remain firm on both strong natural gas prices as well as weather-related load factors. Warmer-than-normal temperatures in the Plains and mid-Atlantic states will tend to offset higher gas consumption seen in the northern areas.

In April, temperatures will be less of a factor as both the natural gas and power markets shift to shoulder period demand. Most important will be the outlook for natural gas inventories towards the end of March. Current indications are that moderate weather and current stocks will place inventories significantly higher than last year at the end of the heating season.

WSI successfully predicted (1) the unusually cold January 2004 in much of the eastern US, (2) a cool 2003 summer in the Southeast and mid-Atlantic, and (3) a cold ‘02-‘03 winter in the Southeast. 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 February 17.

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.