In the News: April-September cooling degree days up 4 percent in revised STEO forecast
The U.S. Energy Information Administration (EIA)’s May 2013 Short-Term Energy Outlook (STEO) forecasts 1,273 CDDs for April-September 2013, 4.3 percent more than in the April 2013 STEO, and 1,257 CDDs for April-September 2014, an upward revision of 4.1 percent. Both of these revised totals remain below the 1,390 CDDs recorded during a seasonably warm April-September 2012. Typically, around 90 percent of the CDDs for a given year occur during the April-September period.
The May 2013 STEO uses data from the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center’s April 2013 degree-day outlook. This was the first month NOAA benchmarked its forecasts off of average temperatures from 1981-2010, and used population weights based on data from the 2010 U.S. Census. Previously, NOAA benchmarked its forecasts off of average temperatures from 1971-2000, and calculated population weights using data from the 2000 U.S. Census. This led to an upward revision of STEO’s CDD forecast, and a downward revision in its forecast for heating degree days (HDDs).
As a result, the May 2013 STEO forecast contains an increase over the April 2013 STEO forecast in electric generation from all sources of 0.6 percent for April-September 2013 and 0.7 percent for April-September 2014. At the same time, it also revises up the projected Henry Hub spot price by almost 11 percent for both of these periods. So, although this month’s STEO forecasts more CDDs in April-September 2013 and 2014, and therefore more electric generation, it revises downward the forecasted amount of natural gas consumed for electric generation by 1.1 percent for April-September 2013, and 2.8 percent for April-September 2014 as a result of higher prices.
Spot natural gas prices generally increased during the report week. The prices increased most significantly after the weekend, when they rose between 20 cents and 40 cents per MMBtu at most major trading hubs as warmer weather took hold. The Henry Hub price increased 13 cents to $4.03 per MMBtu yesterday from last Wednesday.
The price of the NYMEX June 2013 near-month contract increased from $4.070 per MMBtu to $4.186 per MMBtu during the report week. Similarly, the price of the 12-month strip (the average of the 12 contracts between June 2013 and May 2014) increased by 12 cents to $4.333 per MMBtu on May 22 from last Wednesday.