Cold US Winter Could Absorb Growing Gas Storage Glut
(Copyright © 2009 Energy Intelligence Group, Inc.)
LNG Intelligence Wednesday, August 26, 2009
Some US weather forecasting services are providing a preliminary glimpse at the upcoming 2009-10 winter -- and the outlook is cold. Indeed, some forecasters see the potential for the coldest US winter in a decade. If these forecasts pan out, the country may need every molecule of natural gas being stuffed into its brimming storage fields.
"We do think there are opportunities for a potentially colder than normal winter coming up, one of the coldest we've seen in the past decade," suggests former EarthSat meteorologist Matt Rogers, now with the Commodity Weather Group. "We're bullish going into the late autumn and into the winter.
"The main crux of the forecast is that we’ll see a weak to moderate El Nino that peaks early ahead of the core heating season," Rogers said. "When this happens, we tend to have a more favorable pattern over North America for cold air delivery. There are other benchmarks that need to be achieved including watching a pattern in the North Pacific as well, called the PDO. But for now, our best thinking is that a colder East and South winter appears to be more likely."
While Rogers is the first to point out that long-range weather forecasting is hardly a sure thing, it might be worth noting that The Old Farmer's Almanac agrees that the coin flip for the 2009-10 winter is indicating a greater potential for a cold season.
But it’s not just Rogers and the Almanac. AccuWeather Senior Meteorologist Joe Bastardi is also seeing some similar historic weather trends that he says could herald a bitterly cold winter, particularly for the Northeast and South.
"The closest comparison we’re using for this upcoming winter is the 2002-03 winter season," Bastardi said. "Then you have the extreme case of the 1977-78 winter, which is also a possibility."
The latter winter held the record for subfreezing temperatures for an unrelenting 51 days. But even a possible repetition of the milder 2002-03 season has some gas traders anxious as that winter's gas inventory started at around 3.2 trillion cubic feet and ended at a panicky 642 billion cubic feet. That was seven years ago, and the US population has grown by an estimated 26 million people, thus notably increasing natural gas heating loads.
"That particular year was very worrisome for the natural gas market, because it was so cold that by mid-January 2003 we were well under 1 Tcf in the ground and still facing February, which is typically one of the coldest months of the year," said a trader in Ohio. "Plus, we still had at least six to eight weeks of winter left to go. The market was truly freaking out."
Luckily, Mother Nature relented. For the rest of January and February 2003, temperatures turned above-normal, saving the country from a potential weather-related emergency.
Meanwhile, the US National Weather Service is beginning to come on board with a potentially colder winter ahead. On Friday, the National Oceanic and Atmospheric Administration cooled down its most recent winter forecast from a previous update.
However, not everyone is yet jumping on the deep-freeze train. Meteorologist Steve Gregory is looking for potentially above-normal temperatures in the Midwest and near-normal conditions in the East. He also attributes his perspective to the El Nino, noting that it that came on quite strongly this summer.
"If the El Nino becomes a truly strong event, and right now it appears to have a 70% probability of doing so, then it will almost certainly bring a very mild winter to the Midwest and near- to slightly above-normal temps in the Northeast," Gregory said. "The southern states and Southeast US will average below normal, primarily due to a lot of storminess as the main storm track should extend across the southern tier of states.
"If the El Nino weakens, which would be atypical for an event that has come on so strongly during the summer, and we have a 'weak' event, then a colder than normal winter will end up affecting the primary demand areas.”
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Like I say, let's see what happens to this El Nino before making a call on winter natty prices. |
