Warm Weather Sending a Chill Down Wall Street - TheStreet

Warm Weather Sending a Chill Down Wall Street

Energy companies are seen issuing earnings warnings due to the unseasonable weather.
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Winter temperatures may be reaching record highs across the northeast and midwest of the U.S., but they are sending a chill through Wall Street.

On Monday,

CMS Energy

(CMS) - Get Report

said unseasonably warm weather could cut its earnings by as much as 10 cents a share.

CMS, which generates most of its revenue from its natural gas and electric utility,

Consumers Energy

, had been expected to earn 73 cents a share, according to a poll of analysts conducted by

First Call/Thomson Financial


CMS, based in Dearborn, Mich., slipped 11/16, or 2%, to close at 31, a 52-week low, following the announcement, and analysts warned that more utilities might issue similar warnings.

"It's not necessarily going to be a robust fourth quarter because of the abnormally warm temperatures so far this fall," said Gary Hovis, an energy analyst with

Argus Research

, adding that he expected energy utilities throughout the Northeast and upper Midwest to post softer-than-expected earnings.

The mild weather is also expected to weigh on heating oil and natural gas prices toward the end of the year.

CMS said in a statement that for October and November, warm weather resulted in lower utility natural gas sales and pipeline deliveries, including over 7 billion cubic feet less of natural gas sales had temperatures been as low as expected.

Dan Horn, an analyst at

Refco Energy Group

, said that if the weather didn't turn cold by the end of December he would expect the price of January natural gas futures to fall to about $2.40 per million British thermal units, from their Monday close of $2.64.

"If we don't have any cold weather by the end of December, we will see it back at $2.40," Horn said. Refco, a commodities trading house, does not currently hold positions in natural gas and heating oil.

The January futures contracts for heating oil are also expected to drop 3 cents to about 66 cents a gallon prior to their expiration at the end of the month. They closed at 69.44 cents a gallon on Monday.