Moderate Weather and El Niño Conditions Provide Little Hope for Natural Gas Bulls
Widespread above-normal temperatures into the first week of May are expected to cause the year-over-year natural gas storage surplus to expand even further. While warmer temperatures could cause a slight uptick in the use of natural gas-fired electric generation in the South, in most locations, like the Midwest and the Northeast, the above-normal temperatures mean the turning off of furnaces and a reduction in the use of natural gas for heating needs.
Looking ahead this summer, the Colorado State University hurricane forecasting team says there is a high likelihood for the development of El Niño conditions in late fall or early winter. El Niño is defined as warmer than normal sea-surface temperatures in the tropical Pacific Ocean that impact global weather patterns. While El Niño can lead to cooler summer temperatures, its impacts are more evident in the winter. El Niño events tend to bring wetter and cooler weather to southern states, and warmer temperatures conditions to northern states. In addition, El Niño events tend to cause a reduction in hurricane-related activity.
According to an April 4, 2012, forecast by Colorado State University (CSU) Research Scientist, Philip Klotzbach, and Professor Emeritus of Atmospheric Science, William Gray, the 2012 Atlantic-basin hurricane season will have reduced activity and a below-average probability for major hurricanes making landfall along the U.S. coastline.
Valerie Wood, President of Energy Solutions, Inc. in Verona, Wisconsin, explains what all of this means for natural gas prices. “The current weather outlook for this summer and potentially the next winter is bearish. This is a time of year referred to as a shoulder month, as there is little need for natural gas for either heating or cooling needs. Given the weather outlook, storage injections should continue at a very strong pace, only emphasizing the abundant supply situation.”
Additional information about natural gas storage inventories, price trends, demand issues, production levels, rig counts, and much more can be found in the Monthly Edition of The Advisor. Take a FREE, no-obligation 60-day trial to The Advisor and receive the most recent Weekly Edition, as well as the Monthly Editions for May and June, which will contain additional insight into bearish, bullish and neutral factors that affect pricing within the Natural Gas Industry. Learn more by visiting www.energysolutionsinc.com or start your 60-day trial today.
# # #
About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.