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

WSI expects the following monthly trends:

• In December, cooler-than-normal temperatures are now expected east of the Mississippi River. Coolest temperatures, relative to normal, are expected in the Southeast. Warmer-than-normal temperatures are expected in the western two-thirds of the country, with the largest temperature anomalies expected in the Southwest.

• In January, cooler-than-normal temperatures are expected in the Pacific Northwest, northern and central Rockies, the Plains, and Great Lakes states. Coolest temperatures, relative to normal, are still expected in the central and southern Plains. Warmer-than-normal temperatures are expected in California, the Southwest, and most locations east of the Mississippi River. The largest positive temperature anomalies are again expected in the Southwest.

• In February, warmer-than-normal temperatures are expected in all locations. Warmest temperatures, relative to normal, are again expected in the Southwest.

According to WSI seasonal forecaster Dr. Todd Crawford, “We expect a reversal of the November pattern in December, with warmer-than-normal temperatures returning to the West and cooler-than-normal temperatures in the East. We differ from CPC in the Southeast, where they expect another warm month. We also expect the entire December-February period to be warmer-than-normal in the western half of the country, with slightly cooler-than-normal temperatures in the East. The CPC outlook is not notably different from ours, emphasizing the warmth in the West.”

Effects in the Marketplace
WSI’s current forecast indicates cooler-than-normal temperatures East of the Mississippi in December. Cold weather early in the winter season may set bullish expectations and cause concerns with regard to heavy draws on gas inventories if the cold weather should be perceived as extending through March. Gas and electricity prices then may rise unduly due to this expectation. However, WSI’s forecast calls for warmer than normal temperatures in the East in January and February which should moderate prices.

Cooler than normal temperatures are expected in the Plains states in January which will have a bullish impact on gas demand, offsetting the lower demand from warmer than normal temperatures in the East consuming region. A warmer than normal outlook for all regions in February should help allay fears of gas shortages and to keep prices moderate. Lower prospects for high gas price spikes will also keep power prices moderate.

WSI successfully predicted (1) the significant pattern change in November 2003, (2) a cool 2003 summer in the Southeast and mid-Atlantic, (3) a cold ‘02-‘03 winter in the Southeast, and (4) 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 December 16.

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.