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WSI: Cooler Summer Temperatures to Remain Focused Across the Central US

More Variable Temperatures Expected in the Northeast for August/September

ANDOVER, MA--(Marketwired - July 21, 2014) - WSI (Weather Services International) has issued their latest forecast for the August-October period. The forecast indicates that below-normal temperatures will be prevalent from the northern and central Rockies eastward across the Great Lakes and Ohio Valley regions, with above-normal temperatures expected elsewhere, especially the Pacific Northwest and Southeast. The most significant negative temperature anomalies will be found across the northern Plains (MISO power pool). The WSI seasonal outlooks reference a standard 30-year normal (1981-2010). 

According to WSI Chief Meteorologist Dr. Todd Crawford: "After a moderately warm June, July has turned sharply cooler, especially across the central US. This trend towards cooler temperatures as the summer progresses is common during emerging El Nino events, as the atmosphere becomes more supportive of the increased west Pacific tropical activity that often forces cooler Canadian air masses southward into parts of the central and eastern US. We expect this shift in the seasonal base state to persist through the remainder of summer, with the more unpredictable sub-seasonal variations superimposed on the larger-scale signal. The eastern US will see more variability, with occasional waves of heat alternating with cooler spells going forward. Finally, some of the initial analysis we've done suggests that another cold winter may be favored this year, although there are still many other drivers of the winter pattern that will reveal themselves in the coming months. Because of these 'known unknowns,' confidence in a winter forecast this far out is very low."

In August, WSI sees the monthly breakdown as:

Northeast* - Cooler than normal
Southeast* - Warmer 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: "In August, cooler-than-normal temperatures centered over PJM and MISO should soften power prices and implied market heat-rates. Northeast natural-gas prices (i.e. Marcellus shale gas region) should continue to run very soft compared to Henry Hub due to below-normal regional temperatures and increased production. Reduced weather-related demand should also allow natural-gas inventories to refill rapidly in August and decrease the deficit to last year's level. In Texas, warmer-than-normal August temperatures should help firm ERCOT power prices and implied market heat-rates."

In September, WSI forecasts:

Northeast - Warmer than normal
Southeast - Warmer than normal
North Central - Cooler than normal
South Central - Warmer than normal
Northwest - Warmer than normal
Southwest - Warmer than normal

Kostas added: "In September, mild Midwest temperatures should continue to pressure natural-gas prices lower particularly in eastern Pennsylvania where increased production and pipeline constraints are causing wide price spreads to Henry Hub this year. Above-normal natural-gas injection rates are likely to continue in September. Natural-gas inventories have exceeded last year's injection rate by 2.3 Bcf/day through the first half of the injection season. With relatively mild temperatures expected in August and September, we expect this figure to increase during the second half of the injection season. Warmer-than-normal temperatures in the South and cooler-than-normal temperatures in the Midwest should also help keep Henry Hub prices firm relative to Marcellus price points. Although relatively soft Northeast power prices are expected in in September, relatively firm power prices are possible in California due to firm electrical loads and decreasing hydro generation in the region."

In October, WSI forecasts:

Northeast - Warmer than normal
Southeast - Warmer than normal
North Central - Cooler than normal
South Central - Cooler than normal
Northwest - Warmer than normal
Southwest - Warmer than normal

Kostas noted: "Energy demand is expected to soften considerably in October due to moderating seasonal temperatures. Soft energy demand in the Northeast and Marcellus shale gas regions should continue to pressure delivered natural-gas prices lower and help natural-gas inventories finish the injection season very strong. As a result of the relatively mild temperatures expected over the next three months, we are forecasting North America inventory levels will finish the injection season above 3,700 Bcf (and not far off last year's adjusted level of 3,809 Bcf). While natural gas prices are expected to finish the summer injection season relatively soft, October power prices and implied market heat-rates should be supported by seasonal generator maintenance."

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 August 22. 

*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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