This upcoming winter may continue a general trend of starting later in the season, with a potential “false start” that begins as the West receives the cold temperatures first and the East following later in the season, which holds implications for natural gas prices, according to WeatherBELL Analytics’ Joe Bastardi, chief meteorologist.
Looking at broader climate trends, Bastardi, who spoke Monday at the LDC Gas Forums Midcontinent conference in Chicago, said the warming trend was undeniable.
“We’re definitely getting warmer,” he told the audience.
The late-start-cold-finish winter outlook iterated by Bastardi is likely a bearish prospect overall.
“Cold in March is not as important as cold in December,” said IHS Markit’s Samuel Andrus, executive director of North American natural gas, who spoke at the conference on Tuesday.
Later starts to the winter season mean the fall injection season for natural gas storage could last later into the season too, giving stockpiles more time to replenish before the peak demand months in January or February.
That may hold implications for gas prices in the winter strip, said NGI’s Patrick Rau, director of strategy and research.
“If winter weather doesn't become colder until later in the season, it could come a bit too little too late, because more gas will be in storage to service the rest of winter,” he said. “That means you may see November or December be the peak winter pricing month even more going forward.”
For 15 of the last 25 winters, November or December have marked the highest settlement prices on the winter natural gas strip, Rau noted. If winter weather were to continue trending later, the spread between peak pricing and latter winter month pricing may be more pronounced.
The Farmers’ Almanac in its winter outlook issued in late August predicted a later arrival of peak winter demand. The coldest outbreak is forecast to arrive during the final week of January and linger through early February, with spring slower to start and winter temperatures lingering across the Great Lakes, Midwest, New England and Northeast.
While Bastardi acknowledged a warming climate, he said broad investments in government emission reduction programs at all levels are too costly and have a relatively minimal impact on warming. He said broad initiatives at the federal level would likely only reduce the rate of global temperature increases by a fractional amount over a 10-year period, and thus don’t justify the expense of some emission reduction programs.