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Triple-Dip La Niña to Intensify Drought, Deliver Northern Deep Freeze and Drive Natural Gas Demand, Says NOAA
Harsh winter freezes could propel natural gas across large swaths of the northern United States this winter, while unrelenting drought conditions in the West could result in weaker hydropower and drive more gas demand for cooling in California and the Southwest next spring when temperatures rise.
Across most of the southern United States, however, winter temperatures are forecast to be above normal, leaving conditions mild and demand for natural gas to heat homes relatively soft.
Such were the key themes from the National Oceanic and Atmospheric Administration’s (NOAA) winter weather outlook, issued Thursday. The outlook from NOAA, a division of the National Weather Service, covers December through February.
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Jon Gottschalck, chief of the NOAA Climate Prediction Center’s Operational Prediction Branch, said during a call with reporters that a La Niña weather pattern would return for a third consecutive winter. He said this likely would drive warmer-than-average temperatures in the South but colder-than-normal conditions in the North, from the Pacific Northwest to the Great Lakes.
“This will be just the third time that’s happened,” Gottschalck said of the La Niña three-peat. It happened last during winters that spanned the late 1990s and early 2000s. Prior to that, it also occurred for the first time on record in the 1970s, he said.
“Drought conditions are now present across approximately 59% of the country, but parts of the Western U.S. and southern Great Plains will continue to be the hardest hit this winter,” Gottschalck said. “With the La Niña climate pattern still in place, drought conditions may also expand to the Gulf Coast.”
La Niña conditions also tend to foster drier-than-average conditions across the South as a whole, while ushering in wetter-than-average conditions in areas of the Pacific Northwest, Rocky Mountains, Upper Midwest and Great Lakes, he noted. This could mean heavy snowfall in northern markets over the course of winter.
The NOAA forecast syncs up with other winter outlooks released in recent weeks.
The Farmers’ Almanac predicted dry conditions in western markets and particularly cold conditions in the Upper Midwest. Its forecast shows temperatures dropping as low as 40 degrees below zero in the region early in 2023.
AccuWeather forecasters also predict persistent drought in the West and frigid air in the North this winter. Additionally, they see the potential for a severe thunderstorm season in southeastern states because of warmer-than-normal ocean temperatures.
Only a few weeks ago, the potential for a brutal northern winter rattled natural gas markets.
After a scorching hot summer – and robust cooling demand – natural gas traders entered the fall worried about inadequate supplies in storage for winter. Nymex futures prices had topped $9.00/MMBtu in the summer and approached 14-year highs with supplies in storage more than 10% below the five-year average. Robust global demand for U.S. exports added another important wrinkle.
However, a string of triple-digit storage injections this fall has eased concerns swiftly, with the November futures contract falling to near $5.00 on Thursday after the latest storage report from the Energy Information Administration (EIA). Production that hit record levels earlier this month and waning weather-driven demand created room for stout storage increases.
EIA reported an injection of 111 Bcf natural gas into storage for the week ended Oct. 14. It marked the fifth straight build above 100 Bcf and narrowed the deficit to the five-year average to only 183 Bcf. It put storage on a trajectory toward balancing supply/demand ahead of winter, allowing natural gas bears to maul prices.
“Recent strong selling has been attributed to the warm and bearish weather pattern for the coming 15-days” and “massive weekly storage builds into supplies this fall,” NatGasWeather said Thursday.
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