The weather pattern late last week provided conditions which spurred some higher cooling demand in pockets around the US, but overall demand requirements were close to normal. This week, the placement of a ridge in the east combined with the Bermuda High will produce warmer than normal temperatures across much of the eastern and northcentral US, with daytime highs in the low to mid 90s for much of the week. Cooling demand from this week’s heat has been partially offset by cool evening temperatures, which have reduced the nighttime cooling demand. From Wednesday forward, evening lows will be increasing, so we expect higher demand for the second half of the week. While this outbreak of heat will not be a prolonged event in the midwest, the warm temperatures will be extended in the eastern demand centers. Tropical activity last week had the energy markets talking – while Bertha was not a threat to the eastern US, the fact that the system this strong developed this early in the season had traders eyeing the weather reports more frequently. At present, the National Hurricane Center is monitoring a couple of systems in addition to Bertha, which is now a Tropical Storm. There is a low pressure system causing some heavy thunderstorm activity in the eastern GOM which unlikely to develop into anything more significant. A larger cloud mass exists east of the Windward Islands, which the NHC says may develop into a Tropical Depression sometime today. While they place the probability for development as medium, the next 24-36 hours will be more clear on the potential for this system. If this system does happen to strengthen, monitor the market closely for responses in crude and natural gas. Again, weather is secondary after crude fell hard in yesterday’s (Tuesday) trading. Crude oil’s drop was the largest one day loss in 18 years; in overnight trading, crude has extended the downward slide (down $2), but it is still trading above yesterday’s lows. WTI has been moderately bearish on crude, and while we feel prices will still remain high, this could be part of the downward move that constitutes a mild correction.

The current week’s US weather outlook vs. last year and normal is shown on the maps above.