WSI Energycast Outlook Calls for Mild Temperatures in Northern US for February-April period.

WSI and ESAI issue an update of special interest to energy traders 

ANDOVER, Mass. -- WSI Corporation today issued the seasonal outlook for the upcoming three-month period (February-April). WSI expects this period to average warmer than normal across the northern two-thirds of the country, especially in the northwestern quarter of the country, with below-normal temperatures confined to the southern tier of states. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

The monthly breakdown follows:

In February:

Northeast - Warmer than normal

Southeast - Colder than normal

N Central - Warmer than normal

S Central - Colder than normal, except OK/KS

Northwest - Warmer than normal, especially ID/MT/WY

Southwest - Colder than normal, except UT/NV

Expected Market Impact (provided by ESAI)

The WSI February forecast indicates warmer-than-normal temperatures across the northern tier of the country, with the southern regions expecting colder-than-normal temperatures. Warmer temperatures in the northern regions will result in lower demand for natural gas from both the heating and power sectors. In the southern regions, cooler temperatures will not add enough demand to provide a significant offset to lower demand in the northern regions. The outlook for mild February temperatures in the major gas-consuming regions should contribute to high end-of-season natural gas inventories in April. Due to the expectation of moderated natural gas prices and warmer temperatures which will reduce loads, power prices throughout the northern regions should also be moderate.

In March:

Northeast - Warmer than normal, especially NJ/PA

Southeast - Warmer than normal

N Central - Warmer than normal, especially MN/ND

S Central - Warmer than normal, except TX

Northwest - Warmer than normal

Southwest - Warmer than normal, especially NV/UT

Expected Market Impact (provided by ESAI)

The WSI March forecast indicates warmer-than-normal temperatures across the whole country with the exception of Texas. In the key heating demand areas across the northern tier of the country, natural gas consumption should continue to be lower than the five-year average. With the mild January to date and the outlook for a warmer-than-normal February, the warmer March outlook should add to the bearish sentiment for natural gas prices. Lower natural gas prices and lower loads with warmer temperatures will translate into lower power prices in most regions.

In April:

Northeast - Cooler than normal

Southeast - Cooler than normal, especially FL

N Central - Cooler than normal, except MN/ND

S Central - Cooler than normal

Northwest - Warmer than normal, especially WA/OR

Southwest - Colder than normal, except CA/NV/UT

Expected Market Impact (provided by ESAI)

The WSI April forecast indicates cooler-than-normal temperatures across most regions and warmer-than-normal temperatures in the Northwest. Cooler weather across much of the Midwest may bring some late-season natural gas inventory withdrawals that are higher than average. However, above-average April gas withdrawals will not be high enough to materially impact what are likely to be very high end-of-season inventory levels. Shoulder period demand levels in most power demand areas means that temperature variations will not impact prices significantly. Seasonal planned generator maintenance will have more impact on prices than weather in April.

According to WSI seasonal forecaster Dr. Todd Crawford, "While the late January pattern will be characterized by more frequent visits from Arctic air masses, our objective model guidance suggests that the recent pattern flip to a northeastern Pacific ridge may be temporary, possibly driven by the recent strong pulse of the Madden-Julian Oscillation. We feel that a milder pattern will re-emerge by early or mid-February and will generally persist into March."

WSI successfully predicted (1) the widespread warmth in the eastern US in the October-December period, (2) the abrupt transition to below-normal temperatures in the US in September 2006, (3) the warm US summer in 2006, and (4) the warm 2005-06 US winter. 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. An update to the current forecast will be issued on January 25, with the next new forecast package (for March-May) issued on February 13.

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.wsi.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.