Those of you who are subscribers have heard me talk about a warm first part of winter for the US for weeks and hence a generally bearish outlook for natural gas prices. Stocks are huge and global weather, not just in Australia has been warmer than normal. Obviously, the situation in Australia is one for the record books and is due to a combination of Climate Change, the positive Indian Dipole and weak El Nino signal. These teleconnections have also affected US weather and has contradicted so many “global warming” deniers who keep pointing to low solar cycles as a reason for a cold winter.
Will things change for US natural gas areas? It all depends on two climatic variables I often look at: 1) Whether the EPO index turns negative (Right now it has been positive). A negative EPO index would build a ridge over Alaska and force cold weather back into the US.
We can see how some models have a negative EPO index heading deeper into January. What is the correlation with the EPO index? Jim Roemer’s unique CLIMATEPREDICT long range weather forecast program (used by many hedge funds, traders and agribusinesses), shows the historical trend and analogs with a negative late January EPO index.
However, at the bottom of this article are my projected analog years that have forecasted any cold US weather being short lived, since early December. This is not bullish for natural gas, even at close to $2.00
2) The MJO: Will it go into a colder phase or stay in a warm phase? History says that when the MJO goes into a strong phase 7-1, that this could make the EPO go negative and cause colder weather. A good definition of the MJO is here. You can see the MJO is trending towards the colder phases.
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Finally, every time there has been a short term cold scare by models, it has not lasted due to a lack of US snow cover and also these teleconnections (stars) from our in house program CLIMATE PREDICT. Notice the warm weather that is suggested into early February. This is in contrast to some computer models.
The El Nino signal, global warming and my program (below), illustrate how we have out guessed standard cold computer models, which most meteorologists believe verbatim
BOTTOM LINE—Natural gas prices are likely NOT finished going down and it would not surprise me if any cold is short lived.