Looking To July - Energy Demand And Weather

With only two weeks left in June, our attention is beginning to shift towards early July to see what weather pattern is likely to take shape and how that should drive energy demand. For our clients we are in the process of re-designing some of our reports to include even more model data, atmospheric indicators, and analysis. As one example, we conglomerate a number of longer-term indicators that help us in the 2-3 Week timeframe. Below we show some of the indicators that we have been using on one of the long-range forecast pages. 

natural gas commodity weather

This mixed bag of indicators (and some model output) can be useful for attempting to identifying the upcoming pattern. For reference, we begin with the Climate Prediction Center monthly outlook for July, and then attempt to determine how the forecast may trend from there. We see that the American CFSv2 climate model has trended colder for early July than expected, though these kinds of climate models can oscillate wildly.

By following the Bering Sea Rule (BSR) we see that the start of July may actually feature some warming across the East with a relatively progressive flow. This is similarly supported by the GEFS AO forecast, where the AO is forecast to trend back towards neutral into the beginning of July. A neutral AO will not bottle as much cool air up near the north pole, unlike the strong positive AO we are likely to see in the coming week (though even with the positive AO we still expect a cool shot in the East late next week). 

Additionally, we are seeing increasingly that a strongly negative PNA will trend back to neutral, and the EPO should also trend back to neutral. This would appear indicative of a progressive pattern with alternating warmer and colder trends across much of the country, though these neutral trends also lower overall forecast confidence as it becomes less clear what will be driving the pattern, and thus where we need to focus.

With the SOI trending more positive recently as well we would expect any influence of the "zombie El Nino" we wrote about yesterday to be relatively fleeting, though that trend in the Pacific should still keep the flow relatively progressive (and likely preventing any major heat waves). The result is that this would seem to indicate that the start of July will not be quite as warm as the CPC forecast would suggest in the East, but there still could be a warmer bias in a lot of key energy demand regions. 

Now, this is just one piece of the analysis that goes into the long-range forecast. Other critical components of long-range forecast include the Madden/Julian Oscillation, which we break down daily, other climate models, and longer-term oscillations like the Global Wind Oscillation (GWO) etc. Still, these eight images can begin to provide an effective forecast base for a 2-3 week forecast. 

 

For more details on the expected implications of this within the natural gas market and daily updates on various weather models and their expected ...

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