WSI Energycast Seasonal Outlook Calls for Cold Temperatures in Northwest Quarter of US, Warmer-than-Normal Temperatures Elsewhere This Fall

WSI expects the following monthly trends:

• In October, cooler-than-normal temperatures are expected in most areas east of the Rockies, with the largest negative temperature anomalies expected in the northern and central Plains and Great Lakes states. Warmer-than-normal temperatures are expected elsewhere, with the largest temperature anomalies along the Pacific Coast and in the Southwest.

• In November, cooler-than-normal temperatures are expected in the Pacific Northwest, northern and central Rockies, and northern and central Plains. Coolest temperatures, relative to normal, are expected in the northern Rockies and the Pacific Northwest. Warmer-than-normal temperatures are expected elsewhere, with the largest temperature anomalies expected in the Northeast.

• In December, cooler-than-normal temperatures are expected north and west of a line from San Diego to Cleveland. Coolest temperatures, relative to normal, are again expected in the Pacific Northwest and the northern Rockies. Warmer-than-normal temperatures are expected elsewhere, with the largest temperature anomalies expected in the Gulf Coast states and Southeast.

According to WSI seasonal forecaster Dr. Todd Crawford, “We expect below-normal temperatures in the eastern two-thirds of the country in October, while CPC is forecasting equal chances of warmer-than-normal or colder-than-normal in the East. However, we also expect the rest of the October-December period to be warmer-than-normal in all of the major eastern cities, while CPC again is forecasting equal chances of warmer-than-normal or colder-than-normal.”

Effects in the Marketplace
WSI’s current forecast indicates above-normal temperatures in the Northeast for the fourth quarter, particularly in November. As October and November tend to be shoulder months in the Northeast, the warmer weather will provide a backdrop for lower power demand and will be somewhat bearish for prices. Lower Northeast demand could also provide for higher natural gas injections to storage, which could drive Henry Hub prices lower before entering the winter period. This impact could be offset slightly by cooler than normal temperatures in the northern and central Plains and Great Lakes states, however, it is unlikely to have much effect on the October natural gas injections.

In the Pacific Northwest, an already tight hydro situation, combined with colder-than-average temperatures will help to strengthen Mid-C and COB electricity prices in the fourth quarter.

WSI successfully predicted (1) a hot 2002 summer season, (2) a cold ‘02-‘03 winter in the Southeast, (3) a warm ’02-’03 winter in the Pacific Northwest, and (4) a cool 2003 summer in the Southeast and mid-Atlantic. 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.

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 Billerica, 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.