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Forecasters predict colder winter: EIA

October 12, 2005

WASHINGTON (Reuters) – U.S. government weather forecasters
are predicting slightly colder temperatures compared to a
normal winter, based on heating degree-days, the U.S. Energy
Information Administration said on Wednesday.

“The National Oceanographic and Atmospheric Administration
projects a 0.4 percent colder winter in the lower 48 states, in
terms of heating degree-days relative to normal winter weather,
which would be 3.2 percent colder than last winter,” the EIA
said in its annual winter fuels outlook report.

Heating degree days are calculated by the difference
between 65 degrees Fahrenheit and the average of the high and
low temperatures of a particular winter day. The calculation
indicates household energy consumption for space heating.

NOAA, in a separate statement released at the EIA’s winter
outlook conference, said the Midwest and East Coast have “equal
chances” of warmer, cooler or near-normal temperatures in
December, January and February. It did not elaborate.

The EIA report also said overall U.S. demand for natural
gas would fall by about 1.2 percent in 2005 due to sharply
higher prices. However, industrial demand for natural gas will
tumble by nearly 8 percent from last year due to fuel-switching
because of price, it said.

In 2006, overall U.S. demand for gas will rise by 3
percent, with industrial demand increasing by 6 percent, the
EIA said.

“The industrial rebound in 2006 is partly because of
assumed reactivation of damaged industrial plants in the Gulf
of Mexico region but also reflects renewed fuel demand growth
as domestic industrial plants adjust to higher prices,” it
said.

The price of Henry Hub spot market gas will average about
$9 per mcf in 2005, then fall slightly in 2006, the EIA said.
“Henry Hub prices are likely to remain above $12 per mcf until
peak winter demand is over,” it added.

The EIA report also said U.S. gas production in 2005 would
fall by 3 percent, due largely to disruptions caused by
Hurricanes Katrina and Rita. In 2006, output should rise by 4.2
percent, it said.

Net imports of gas will rise marginally this year, then
soar by 10.4 percent in 2006, it said. Imports of liquefied
natural gas (LNG) will total an estimated 680 bcf in 2005, then
top 1,000 Bcf in 2006.

“High natural gas prices in other world markets during the
first three quarters of 2005 have served to attract available
supplies of LNG that might otherwise have been directed to the
United States, although fourth quarter imports are estimated to
increase in response to high U.S. prices,” the EIA said.




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