WSI Energycast Outlook Calls for Continued Cool Weather in Northeast US

The monthly breakdown follows:

In April:

• Northeast – Cooler than normal
• Southeast – Cooler than normal, especially GA/FL
• N Central – Warmer than normal, especially ND/MN
• S Central – Cooler than normal
• Northwest – Warmer than normal, especially ID/OR
• Southwest – Warmer than normal, especially CA

Effects in the Marketplace
WSI’s forecast for April indicates cooler-than-normal temperatures in the Northeast and South Central states. Lower demand in this shoulder month for both natural gas and power makes these markets less sensitive to the any changes in temperatures. Natural gas inventories should finish the withdrawal season at above-average levels. ESAI expects bearish fundamentals to dominate in April, however, recent pricing trends have bucked the fundamentals. Power prices will not be very responsive to April’s temperature variations, but will be supported by outages due to scheduled generator maintenance programs.

In May:

• Northeast – Cooler than normal, especially ME
• Southeast – Warmer than normal, especially MS/AL
• N Central – Cooler than normal, with the exception of ND
• S Central – Cooler than normal, especially KS/OK
• Northwest – Warmer than normal, especially WA
• Southwest – Cooler than normal, especially NV/UT

Effects in the Marketplace
WSI’s forecast for May indicates cooler-than-normal temperatures in most markets. Warmer-than-normal temperatures are expected in the Northwest states which poses concerns for snowpack and the availability of water for the summer hydro season. Cooler-than-normal temperature expectations in May will reduce the likelihood of early season hot weather and sets the stage for moderate power prices in most markets and low gas demand.

In June:

• Northeast – Cooler than normal, with exception of NJ/PA
• Southeast – Warmer than normal, especially MS/AL
• N Central – Warmer than normal, especially ND/MN/WI/IL
• S Central – Cooler than normal
• Northwest – Warmer than normal, with exception of ID/MT
• Southwest – Cooler than normal, especially NV/CA

Effects in the Marketplace
WSI’s June forecast indicates cooler-than-normal temperatures in two key areas – the Northeast and Southwest. Lower demand for natural gas in the power sector in these regions will be offset by warmer-than-normal temperatures in the Southeast and Northwest. Cooler temperatures in the Northeast in June will provide a lower demand buffer against any delays in the return of generators from their maintenance programs.

According to WSI seasonal forecaster Dr. Todd Crawford, “Our latest forecast models indicate that the cool spring will continue in the Northeast, while the Southeast will warm up by May. There is also a rather strong signal in our forecast models for warmth in the northern Plains and Great Lakes states by June.”

WSI successfully predicted (1) the cold and snowy winter of 2004-05 in the Northeast, (2) the mild November 2004 in the northern US, and (3) the unusually cold January 2004 in much of the eastern US. Their three-month seasonal forecasts have been skillful for 7 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 update for April-June will be issued on March 31, with the next new forecast package (for May-July) issued to clients on April 19 and to the press on April 26.

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.