Why Jim Roemer Predicted A Warm Winter for Natural Gas Prices Last December

One of our most accurate trade ideas this past season was selling natural gas. That warm winter projection was in our forecast for December. WeatherBell, and many other forecast firms, kept touting cold winter models. In my opinion, they also published erroneous theories that low solar activity is more important than a warming planet. I do acknowledge that I had been in the camp for some cold early winter weather in November. However, I quickly changed that view due to various global teleconnections. Here is an article I wrote a few months ago.

My reasoning for a warm winter outlook was due to teleconnections I predicted: weak El Nino, positive Indian Dipole, etc. You can learn about weather and the teleconnection relationship for FREE

Why Did Natural Gas Prices Suddenly Rally in April?

Over the past few weeks, the pandemic spawned worries about global demand for both crude oil and natural gas. This helped to pressure these energy commodities to new lows, a week ago. I recently highlighted an energy opinion in my WEATHER WEALTH weekly commodity weather blog. In that comment, I stated that lower crude and natgas prices could curtail shale production and possibly boost energy prices. The recent $7/barrel rally in crude futures off the $19 spot contract lows wasn’t based on weather. It is more tied to feelings that OPEC and Russia will have a truce in their oil production war. Longer term, once this pandemic ends, crude prices are likely to sustain a more pronounced rally.

Regarding the weather, an early spring Midwest (and Northeast) cold spell in coming weeks created short covering.

cold

The blue trough shown above is creating some excitement in the natgas market, even though winter is practically over. Nevertheless, New England snows and Plains temps in the teens and 20s next week have created some short covering. In addition to natural gas hedgers/speculators, traders in the wheat market will also be focusing in on this.

cold

Temperatures next Tuesday and Wednesday could actually be colder than this possibly falling into the 20s across even southern Kansas. This will interest wheat market participants who will be closely following what transpires.

Madden–Julian Oscillation

The Polar Vortex break-off is responsible for two bouts of eastern and Midwest cold I expect in the next fortnight. In part, this is due to the MJO.

MJO

The MJO’s cold phase is not the only factor replacing the Polar Vortex to the south. In my opinion, El Nino’s residual effect from last winter, and other teleconnections, caused the near record warm US winter. Now, many of those teleconnections are beginning to change.

What will summer be like? How might you be able to take advantage of the natural gas and grain market? You’ll learn the answers when you sign up for a free trial to my weekly GOLD PLAN blogs.

Jim Roemer

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