Andover, MA –April 21, 2004 — WSI Corporation issued the seasonal outlook for the upcoming three-month period (May-July). WSI expects this period to average warmer-than-normal in most locations, with the exception of cooler-than-normal temperatures in New England and California. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).
WSI expects the following monthly trends:
* In May, warmer-than-normal temperatures are expected in most locations, with the exception of the eastern seaboard and California.
* In June, warmer-than-normal temperatures are expected in much of the interior US, with cooler-than-normal temperatures along the Pacific and Atlantic coasts.
* In July, warmer-than-normal temperatures are again expected in most locations, with the exception of California and parts of the Southwest.
* According to WSI seasonal forecaster Dr. Todd Crawford, “We expect a pretty warm summer this year, especially in the southern and central Plains, Great Lakes, Ohio Valley, and the Southeast. After a cool spring, even the Northeast should warm up by late summer.”
Effects in the Marketplace
WSI’s forecast indicates warmer-than-normal temperatures in May for most regions with the exception of California and the Eastern Seaboard. Similar forecasts are in store for June with cooler-than-normal temperatures on the East and West Coasts and warmer-than-normal temperatures inland. However, during May and most of June, natural gas is in a low-demand shoulder period and temperature impacts will be minimal.
The warmer-than-normal July outlook for most of the Eastern U.S. has a much greater potential impact. This forecast indicates not only higher average temperatures, but also increases the likelihood and intensity of heat events in this region. The impact on power prices, particularly in New York and PJM, is potentially quite bullish. Higher loads from the power sector will also increase demand for natural gas from gas fired generators and could likewise be bullish for natural gas prices, especially if inventory builds are impacted negatively.
The outlook for California is for cooler-than-normal temperatures for the May to July period, which should help to keep power prices moderate. Precipitation for May and June is forecast to be slightly wetter-than-normal brightening the hydro outlook, but July is forecast to be slightly drier than normal despite generally cooler temperatures.
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 May-July will be issued on April 29, with the next new forecast package (for June-August) issued on May 18.
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.
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.
Steve Massa Justin Hull
Marketing- Energycast Trader
Media Relations Manager Weather Services International