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WSI: Above-Normal Summer Temperatures Likely Confined to Western and South-Central US

Still Expecting the Weakest Cooling Demand Since 2009

ANDOVER, MA--(Marketwired - May 16, 2014) - WSI (Weather Services International) has issued their updated summer forecast for the June-August period. The summer forecast indicates below-normal temperatures from the southern Rockies northward to the northern Rockies and Plains and then eastward and southward to the mid-Atlantic and Southeast. Warmer-than-normal temperatures will be confined to the western US, southern Plains, and northern New England. The WSI seasonal outlooks reference a standard 30-year normal (1981-2010). 

According to WSI Chief Meteorologist Dr. Todd Crawford: "There is little change to our updated summer outlook, as the various statistical/dynamical models we use are in unusually good agreement. It is now clear that an El Nino event is emerging, although the chances of a very strong event (e.g., 1997) now appear relatively small. The forcing from the developing El Nino should result in a higher-than-normal frequency of cool Canadian air masses this summer across much of the northern and eastern US, confining the big heat to the western US and potentially parts of the southern Plains. While we are expecting above-normal temperatures across Texas this summer, the magnitude of the heat will likely be modulated by the amount of rainfall that occurs during the next few weeks. More frequent late spring rains will likely increase the odds of only slightly above-normal aggregate summer temperatures there, while a return to a drier pattern during the next few weeks will increase the odds of more notable heat."

In June, WSI sees the monthly breakdown as:
Northeast* - Warmer than normal New England, cooler than normal mid-Atlantic
Southeast* - Cooler than normal
North Central* - Cooler than normal
South Central* - Warmer than normal
Northwest* - Warmer than normal
Southwest* - Warmer than normal

According to Chris Kostas, Senior Power & Gas Analyst at ESAI Power LLC: "With slightly cooler-than-normal June temperatures expected in the East and North Central regions, energy prices in PJM should be moderated by below-normal cooling demand. Above-normal temperatures are forecast for the West, increasing the chances for early-summer heat events and higher energy prices in California. With below-normal cooling demand expected in the Consuming East, PJM natural gas prices should run at a significant discount to Henry Hub (particularly on the cooler days). Offsetting some of this price weakness, however, should be increased natural gas injection demand; which ESAI expects will run about 4 Bcf/day above last year."

In July, WSI forecasts:
Northeast - Cooler than normal
Southeast - Cooler than normal
North Central - Cooler than normal
South Central - Warmer than normal
Northwest - Warmer than normal
Southwest - Cooler than normal

Kostas added: "Cooler-than-normal temperatures are expected to prevail over much of the country in July. Aggregate North American cooling demand is expected to run below normal, resulting in soft energy prices, particularly in the Northeast markets. Large price discounts to Henry Hub can be expected in PJM and New York this summer, particularly on cooler days. Robust natural gas injections should help to offset some of this price weakness and allow storage levels to improve relative to last year, however. In Texas and California, above-normal temperatures should help to support power prices. Increased energy demand in Texas could also help to support Henry Hub prices relative to the shale production region of Pennsylvania."

In August, WSI forecasts:
Northeast - Cooler than normal, except northern New England
Southeast - Warmer than normal
North Central - Cooler than normal
South Central - Warmer than normal
Northwest - Warmer than normal
Southwest - Cooler than normal

Kostas noted: "In PJM and northern MISO cooler-than-normal August temperatures should help to moderate power prices and implied market heat-rates to finish the summer. Natural gas prices in the Mid-Atlantic region should be soft relative to Henry Hub due to lower electrical loads. Reduced aggregate cooling demand and lower electrical loads should also allow natural gas inventories to reduce the deficit to last year's level. In Texas warmer-than-normal August temperatures should help to firm ERCOT power prices and implied market heat-rates."

WSI provides customized weather information to global commodity traders via its industry-leading WSI Trader Web site. WSI will issue its next seasonal outlook on June 20. 

*To view the map defining WSI's US regions, click here.

About WSI Corporation
WSI (Weather Services International) and Weather Central are the world's leading providers of weather-driven business solutions for professionals in the energy, aviation, insurance and media markets, as well as multiple federal and state government agencies. Together they comprise the professional division of The Weather Company and are owned by a consortium made up of NBC Universal and the private equity firms, The Blackstone Group and Bain Capital.

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.

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