Negative Call For Winter Weather – Browning Garriss Calls For Warmer Than Normal Winter
Oct 4, 2016
Heads up, the changing calls such that the winter won’t be cold should be negative to natural gas and keep some investors on the sidelines. Our Energy Tidbits memos have been warning that the forecasts for winter are being reduced. The July forecasts were for a strong La Nina winter, potentially as cold as the cold winter 2010/2011 that had a strong La Nina.
This week, well respected weather forecaster Evelyn Browning Garriss issued her new October forecast and it calls for a warm winter. There are two negatives in her call. First it will be a warmer than average winter. She says “Unless the La Niña strengthens, history suggests this winter will be slightly warmer than average for the US with short, stormy cold spells, especially in January and late February.” Second, she calls for a warm late Autumn ie. Nov, which means a slow start to winter weather demand. Other major weather forecast groups, such as NOAA, have also moved their winter forecasts to a more warmer outlook than a few months ago.
These forecasts have changed dramatically in the past three months. In her July forecast (see our July 10, 2016 Energy Tidbits). We wrote “weather forecasts have been calling for the end of El Nino and there has been an increasing call for a La Nina. This was reinforced this week when Evelyn Browning Garriss (aka the “volcano lady) issued her monthly Browning World Climate Bulletin highlighted how the “majority of experts expect the La Nina to develop in the July/August/September period, with the first conditions around August. They give a 75% probability of all of the event dominating global weather events this fall and winter”. She also highlighted “the coming La Nina has the potential to have a major impact on energy markets. There is a potential for a cooler than average North American winter and much wetter conditions in Asia.” And then she noted that “we have seen volcanic activity create volatile weather patterns in March of this year due to another Alaskan volcano, Mt. Pavlof. The initial reaction to this information and with so many similarities, we can expect a winter that is the same as 2010/2011”.
It is positive that the YoY storage surplus of 1 tcf is almost gone. But increasing calls for warm winter will keep investors on the sidelines until they see how Nov evolves and if the forecasts change.