There has been a lot of talk by forecasters winter has been much warmer than anticipated. But few have discussed the lack of U.S. snow cover, a warming planet nor the record breaking positive QBO index as key reasons.
The lack of U.S. snow cover and what we call a very positive QBO index has been responsible for the collapse in natural gas. In addition, the planet continues to warm and environmental hazards are nothing new. Almost all forecast firms blew the winter forecast for a cold one. In addition, the atmosphere has NOT acted like a weak La Nina but at times a weak El Nino helping to prevent any lasting cold. There have been some winters when a late contra-seasonal rally in natural gas occurred when March was cold?
When the QBO is negative and winds some 20-30 miles up blow from east to west and not west to east as they have been now, this can allow blocks over the Arctic circle, Alaska, etc. to get well established for at least 3-5 weeks and create force a polar vortex south into the country. However, the record strong westerly phase of the QBO tends to weaken blocks and prevents any continuous trend of cold weather. This has been the primary reason that natural gas prices have collapsed 25% the last few weeks.
The present positive QBO phase tends to result in a cold March, and natural gas traders will be watching for that. However, for now a warming planet, the oceans and lack of snow cover, makes any major rally in natural gas prices from cold late winter weather, probably unlikely. One can see below the March historical temperature forecast for the U.S. when the QBO is positive. Often, a reversal from the warm winter by March. However, this is not written in stone due to a warming planet and lack of snow cover, but a cold snowy March could be the rule in some areas. Also, our feeling is that the MJO, discussed in earlier blogs will also allow colder risks and could possibly put a platform in the natural gas market. Neverthless, I do not think the present weather pattern is cold enough to allow for any significant rally in natural gas with the winter of 2016-17 again being warmer than normal.
In the meantime—some occasional weak cold blasts in the eastern U.S. and possible snow events will be the rule in the near future. The biggest cold we see presently is over eastern Europe into Russia with temperatures well below normal and a possible influence on the gasoil market in London.
(see link above of QBO definition)
QBO and March Temps from our exclusive software called Climatech
EARTHWEEK.COM chart below
