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Warm Outlook for U.S. East, Midwest May Crimp Natural Gas Prices

Sept. 24 (Bloomberg) -- The U.S. Midwest and Northeast will probably have above-normal temperatures from October through December, keeping natural gas prices lower as less energy is needed to heat the large eastern cities.

The Midwest may have the highest departures from normal, while the West and the Southeast may be cooler than the 1981-2010 benchmark, according to a report by Weather Services International and Energy Security Analysis Inc.

“Warmer-than-normal temperatures in the Northeast and Great Lakes region in November will reduce early-season heating demand in those key regions,” said Chris Kostas, senior power and gas analysts at Energy Security in Wakefield, Massachusetts. “With mild temperatures expected to stretch from Texas to New England in December, delivered gas prices are likely to remain subdued heading into winter.”

It would be the second year in a row gas prices suffered because of above-normal temperatures. Last year, increased production coupled with warm weather pushed natural gas prices to a 10-year low in the U.S. and by April made it the worst performer on Standard & Poor’s GSCI commodity index.

“The biggest wildcard heading toward winter is the degree of atmospheric blocking in the North Atlantic,” said Todd Crawford, chief meteorologist at Weather Services in Andover, Massachusetts.

Weather Patterns

Weather patterns known as the Arctic and North Atlantic oscillations affect how much cold air drops from the North Pole and whether it gets bottled up along the East Coast.

“It’s still too early to predict the behavior of the North Atlantic Oscillation for the upcoming winter, but is clearly the key to a successful winter forecast,” Crawford said.

Last year, the North Atlantic Oscillation didn’t block cold air in the U.S., and that helped contribute to a milder winter. In the winters of 2009-2010 and 2010-2011, cold was held in North America and seasonal snow records and cold were set.

To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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