(NGZ24) (UNG) (BOIL) (KOLD) 

"The historic Eastern U.S. drought, another hurricane coming and how weather is affecting natural gas trading"

by Jim Roemer - Meteorologist - Commodity Trading Advisor - Principal, Best Weather Inc. & Climate Predict - Publisher, Weather Wealth Newsletter

• Wednesday Energy Report - November 13, 2024

The EPO index, natural gas trading and the eastern U.S. drought A cold, snowy winter in the eastern U.S. is wanted, not only by ski resorts but to help ease one of the worst droughts in New York and New Jersey in 100 years. For the drought to break, the Eastern Pacific Index (EPO) needs to be negative during most of this winter.

Who can’t forget the hilarious “Thundersnow” video featuring Jim Cantore of The Weather Channel back in February of 2015, the last time the eastern U.S. winter was severely cold and snowy. (Jim and I are fellow alumni, we both studied meteorology at the same college in Vermont.)

https://www.youtube.com/watch?v=PdRWGMyeSYY (Jim Cantore - Thundersnow - 5.7 million views on YouTube)

Anyway, the feet of snow that NYC and Boston experienced during January-February in 2015 was during a very negative EPO index but also a weak El Niño.

Below, the warm block you see northwest of Alaska (-EPO) was one reason why natural gas prices exploded earlier this week. The big net short spec position on the warm global October was built into the market. Now there has been risk premium built in “If early winter is cold.” In addition, tropical storm Rafael shut down some off-shore platforms last weekend. 

The big question for natural gas traders will be: Will a short-term cold spell in the Midwest and East brought on by the MJO in phase 1/2 and a negative EPO be long-lasting? 

MJO is in a perfect phase for one last unusual November hurricane

The MJO* is a tropical disturbance that rotates around the globe every 45-60 days. Its present phase in 1-2 the western Pacific opens the door for some cold late November weather. However, notice how it moves into phase 4-5 by early December. If this occurs the cold weather pattern will be short-lived for the U.S. and the EPO will no longer be negative. 

Combining the MJO with developing weak La Niña conditions creates almost no shear in the Gulf of Mexico. This could lead to a near historic mid-November hurricane approaching Florida given that ocean temperatures have been warmer than normal. I pointed out two weeks ago that the combination of underwater volcanoes and man-made CO2 has resulted in the earth being on fire in the last few years. Warm Gulf and Atlantic waters fuel hurricanes.

While the natural gas market is not watching this yet, this hurricane would once again cause demand destruction.

How we “second guess” standard weather models for commodity traders:

So… how does one trade natural gas, and how do I use BestWeather’s proprietary forecast model to second guess standard GFS and European maps that too many meteorologists and energy traders rely on? My ClimatePredict program (which I developed with an Alum friend from MIT) uses 28 different teleconnections to predict natural gas weather, months in advance. From Sea Ice to La Niña, El Niño, and ocean temperatures thousands of miles away, we use these teleconnections to help natural gas traders and producers around the world make better decisions. These models are included in my bi-weekly WeatherWealth newsletter for all energy and agricultural commodities. 

Feel free to request a 2-week TRIAL period to WeatherWealth. (You can cancel at any time)

https://www.bestweatherinc.com/membership-sign-up/

Thanks for your interest in commodity weather!

Jim Roemer, Scott Mathews, and The Weather Wealth Team

Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict, a detailed long-range global weather forecast tool. As one of the first meteorologists to become an NFA registered Commodity Trading Advisor, he has worked with major hedge funds, Midwest farmers, and individual traders for over 35 years. With a special emphasis on interpreting market psychology, coupled with his short and long-term trend forecasting in grains, softs, and the energy markets, he established a unique standing among advisors

in the commodity risk management industry. 

www.bestweatherinc.com