As of 2 PM Eastern the National Hurricane Center has released their latest advisory on Irma, and these advisories will continue coming every 3 hours until the storm dissipates. Irma still has sustained winds of 185 mph and is an extremely powerful category 5 hurricane. The National Hurricane Center has also adjusted their track to account for a slight eastward shift in the majority of model guidance overnight last night and into this morning.

Confidence continues to increase with the eventual path and scope of impacts as well, as we now see far higher odds of tropical storm-force winds across southeastern Florida.

We had expected to see rapidly decreasing uncertainties by today, and that is now becoming more apparent. Models are consistent in showing only very gradual weakening of the system, with at least 36-48 more hours of category 5 status likely (courtesy of Tropical Tidbits).

One clear example of these decreasing uncertainties lies in the latest 12z run of the American GEFS. The new ensemble members in total have a significantly smaller spread than previous runs, with almost all showing significant impacts for southeastern Florida (courtesy of weathernerds.org). There are far fewer that sit outside the consensus than previous runs and they are all clustered very tightly through the next few days before diverging more as the storm approaches the Southeast.

Most other weather models show a similar track as the storm approaches Florida, which is a rather new development. Canadian, European, and English (UKMET) guidance all show the storm passing right near Miami with significant impacts to the region. The whole cone in the NHC forecast shown above remains a possibility at this time, but confidence is increasing in very significant impacts to southeastern Florida, with the main question now being whether the storm makes direct landfall over the region or remains just offshore before sliding up the east coast of Florida and making landfall likely in either Georgia or South Carolina.

Those in southern Florida thus ought to begin making immediate preparations as confidence increases, and it is now apparent that models last night may have adjusted just a bit back too far to the east, as they are now sliding back a slight bit west in their most recent forecasts. This back-and-forth will likely continue a bit, but decreasing ensemble guidance spreads do reflect gradually increasing confidence.

Yet some of the Irma-driven trades of yesterday seemed to unwind a bit today. Cotton prices are down slightly on the day despite some inland growing regions still in the path of the storm, with crude prices up again and RBOB gasoline down as more refineries come back online following Harvey (major hurricanes tend to be net bearish for oil prices on a longer time horizon). Natural gas prices recovered a bit from their losses yesterday too. Even insurers recovered a bit today despite Generac (GNRC) furthering its gains.

Some of these moves may indicate that the markets priced in Irma risk properly yesterday, but they could also have been partially driven by the eastward trend seen overnight that made Irma seem more likely to miss Florida to the east. This would result in landfall in areas that have slightly less population density; generators would still be in high demand, but insured losses would likely be a bit less. Yet afternoon guidance ticked just a bit back west, and more importantly appeared to end this eastward trend that would minimize impacts in the aforementioned markets. Traders in all these markets will no doubt be watching all these future model runs very closely, and it should become clearer tomorrow which Irma trades are back on and which the initial snap reaction after the long weekend was a bit overdone.

In our late morning Note to clients we noted that a western trend in guidance was not out of the question this afternoon based on initialization issues with some models and current storm placement. Though these shifts back and forth are likely to continue, they are becoming smaller in magnitude as our models home in, and are still so important due to the incredible intensity of the storm.

For those working in the energy markets, meanwhile, we will continue to keep a very close eye on the potential impacts for energy demand. We note that late in the day natural gas prices pulled back a bit but appeared supported by a stronger winter strip even as the prompt October contract declined into the settle. This may be indicative of a market that is not concerned as much about short-term demand losses in the face of structural tightness headed into the winter heating season.