WSI Energycast Outlook Calls for Cool Period in Plains, warm along East Coast

The monthly breakdown follows:

In September:

• Northeast – Warmer than normal
• Southeast – Warmer than normal, especially FL and Gulf Coast
• N Central – Cooler than normal, especially NE/IA
• S Central – Warmer than normal, especially TX/AR/LA
• Northwest – Warmer than normal, with exception of northern CA coast
• Southwest – Warmer than normal, with exception of southern CA coast

Effects in the Marketplace
WSI’s forecast indicates warmer-than-normal temperatures in September for most regions. The North Central states will be cooler than normal. A warmer-than-normal outlook for September in the Southern parts of the country will be bullish for electric loads and will provide incremental demand for the natural gas markets. Gas injections to storage have been high this year, so higher demand in September will not necessarily translate into higher natural gas prices.

In October:

• Northeast – Cooler than normal, with exception of PA/NJ/MD/DEl
• Southeast – Warmer than normal
• N Central – Much cooler than normal
• S Central – Warmer than normal
• Northwest – Cooler than normal, with exception of western WA/OR
• Southwest – Warmer than normal

Effects in the Marketplace
WSI’s forecast indicates cooler-than-normal temperatures in October for the Northeast, North Central and Northwest states. October is a shoulder demand month for power and gas and variations in weather have much less impact on the natural gas and power prices. If temperatures are much cooler than normal in late October, some early season natural gas demand could kick in, however, inventories are high and early demand should not rock the market.

In November:

• Northeast – Warmer than normal
• Southeast – Warmer than normal, especially AL/MS
• N Central – Cooler than normal
• S Central – Warmer than normal, especially TX
• Northwest – Much cooler than normal
• Southwest – Cooler than normal

Effects in the Marketplace
WSI’s forecast for November indicates warmer-than-normal temperatures in the Eastern states. As such, heating demand for natural gas in the Northeast states could be very moderate. This would be offset slightly by cooler-than-normal expectations in the North Central states and slightly higher gas demand. Power prices are unlikely to be affected by shifts in weather and will be impacted more by seasonal generator maintenance.

According to WSI seasonal forecaster Dr. Todd Crawford, “We expect the bulk of the cool air to retrogress westward during the fall, becoming centered over the Pacific Northwest by November. The Southeast should be relatively warm throughout the period.”

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 update for September-November will be issued on August 26, with the next new forecast package (for October-December) issued to clients on September 14 and to the press on September 21.

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.