The “statistical odds” of the upcoming winter heating season being as warm as the two prior winters “are about as good as winning the lottery,” said an analyst with Raymond James & Associates Inc. (RJA) last week, responding to investor-critics who insist that RJA’s earlier projections of a possible gas shortage and higher gas prices could unravel in the midst of unseasonably high temperatures this winter.

“To put this into gambling perspective, the odds are certainly stacked against anyone who would lay a wager on this winter being warmer than last winter. In fact, there is roughly a 96% chance that this winter could be colder than the six-year average based on the past 103 years of [historical] data,” said RJA analyst Marshall Adkins in a Raymond James’ Energy “Stat of the Week.” That leaves “only a 4% chance of having a warmer winter this year than the past six-year average.”

Admittedly, “there is still a chance this winter will be warmer than last,” he concedes, “but with the odds stacked against a warmer winter, we believe the smart money is long natural gas.”

In arriving at this conclusion, RJA “charted the recent record warm winters against the past 100+ years to get an idea exactly where they fall in relation to the historical average,” said Adkins. It found that “the 14%+ warmer-than-normal winter last year (as well as the 1999-2000 winter) were off the charts relative to the historical average” for winter temperatures. “Both winters were more than three standard deviations from the mean U.S. winter, which is not likely to occur again in the next 100 years, from a statistical point of view,” he noted.

“We would not profess to be weather forecasters or experts on weather patterns, global warming or El Nino; we are simply laying out historical data and will let investors reach their own conclusions.”

Given normal temperatures this winter, Adkins told NGI he expects prices for natural gas to go “north” of $6/Mcf. He further anticipates the gas storage level will finish out this year’s heating season at roughly 750 Bcf full, assuming higher prices and a normal weather scenario. That compares to the 1.5 Tcf of gas that remained in storage at the end of last winter’s heating season

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