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Near-Record El Nino Could Add Downward Pressure to NatGas Prices This Winter

A strong El Nino event in the Pacific Ocean continued unabated last month and is expected to remain strong through the winter, according to the National Oceanic and Atmospheric Administration's (NOAA) Climate Prediction Center (CPC), a forecast that would further dampen natural gas prices.

"Seasonal outlooks indicated an increased likelihood of above-median precipitation across the southern tier of the United States, and below-median precipitation over the northern tier of the United States," NOAA said. "Above-average temperatures are favored in the West and northern half of the country with below-average favored in the southern Plains and along the Gulf Coast."

The current El Nino event -- warmer-than-average sea surface temperatures in the central Pacific Ocean near the equator -- arrived earlier this year, and has strengthened over time (see Daily GPIMarch 6). It is likely to remain strong through the winter before gradually weakening during the spring and summer of 2016, according to CPC Deputy Director Mike Halpert.

"The September to November Oceanic Nino Index value currently ranks second for this particular season behind only 1997," Halpert said during a conference call Thursday. "So we're not calling this a record today but are looking at a potential record event."

The strength of the El Nino could also bring much-needed precipitation to portions of California this winter, Halpert said.

"For California, El Nino means that there's a pretty favorable tilt toward seeing a wetter-than-average winter, particularly in the January-March [period]. There are other phenomenon that can play a role, so it's not like it's a guarantee, but historically the pattern that El Nino favors across the Pacific contribute to wet winters, especially these types of real strong events." Whether the East also will see a wetter winter isn't as clear, Halpert said.

While it may lead to more moderate temperatures this winter, the recent warm air that has dominated the Northeast, Great Lakes and Mid-Atlantic probably has not been a product of El Nino, Halpert said.

"The pattern is consistent with El Nino, but I really think what we're seeing more is kind of the rather random nature of the Arctic Oscillation," he said. "It's been persistently positive since the earlier part of November, at least, and that favors warm weather in the Northeast for sure."

A series of analysts have warned that the kind of mild winter weather typical of a strong El Nino would further dampen natural gas prices into 2016 (see Daily GPINov. 23Nov. 19Oct. 26Oct. 21Oct. 15).

AccuWeather.com forecasters have said they expect El Nino to intensify and bring relatively mild weather to the Northeast and drought relief to California (see Daily GPIOct. 7). In its annual review of winter fuel supplies, the Energy Information Administration said the average U.S. household can expect a 10% decrease in natural gas expenditures this winter compared with last winter, based on a 4% decline in gas prices and more moderate average temperatures (see Daily GPI, Oct. 6).

NOAA scientists also said El Nino was the leading climate factor influencing the 2015 Atlantic hurricane season, which ended Nov. 30 after a below-normal 11 named storms, four of which became hurricanes, two of them major hurricanes (Category 3 or higher).

"El Nino produces a see-saw effect, suppressing the Atlantic season while strengthening the eastern and central Pacific hurricane seasons," said Gerry Bell, lead seasonal hurricane forecaster at CPC. "El Nino intensified into a strong event during the summer and significantly impacted all three hurricanes seasons during their peak months."

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