Stratospheric warming and the new polar vortex of energy markets

The picture of the Arctic Circle is one in which sea ice is at its lowest level in many years. Warming over the Arctic will push the Polar Vortex south at least in the first half of February.

Midwinter cold possible

Advised more than a week ahead of other weather forecast companies Weather wealth Customers Late January and much of February can be very cold for the United States and parts of Western Europe. If you’re a skier, feet of snow will be visible from the Pacific Ocean to New England over the next few weeks. Europe, which has had the worst ski season in recent memory, will at least get a little boost.

The trick to forecasting the weather is the “second guess” of the standard GFS and European models that most meteorologists rely on “way too much”.

It’s all about stratospheric warming

A sudden stratospheric warming is a major disturbance in the stratosphere’s polar vortex (10-20 miles above Earth’s surface) that begins with large-scale atmospheric waves (called Rossby waves) that are pushed higher into the atmosphere. These waves can “break” (like waves in the ocean) on top of the polar vortex and weaken it. When this happens and there is a warming (red) that cold air and the polar vortex can push south into the United States, Europe or Asia.

The stratospheric polar vortex and the tropospheric vortex are two different things. When the stratosphere heats up over the Arctic, this can push the polar vortex in the lower part of the atmosphere south.

You can see a file Video here about the next major stratospheric warming event.

In scientific papers as far back as the 1940s, the polar vortex generally refers to the circulation of the atmosphere in stratospherenot the troposphere. In the polar regions, the lower edge of the stratosphere begins about 5 miles above the Earth’s surface and extends upwards to about 30 miles. The troposphere is the layer between Earth and the stratosphere where we work and play.

How we looked at the stratosphere to predict the coldest midwinter in the United States

The video is on January 13th He talks about stratospheric warming 10 to 20 miles above the atmosphere. The event is so powerful that cold weather may persist in the United States through March and the second polar vortex into winter. This could last longer than what brought record snow to Buffalo, New York a few weeks ago and briefly helped natural gas prices rise to $7.00 per MMBtu.

Will that be enough to ensure natural gas prices (ETF: FGC) return to more than $6 and $7, as they were two months ago when they became really bearish? Mostly not. why? For one thing, the early warm winters in Europe and the United States renewed natural gas supplies. The EIA numbers were bearish, and another drop is likely this week. No panic by the commercial energy companies that stockpiled natural gas during last summer’s panic. However, if the cold weather continues into March, we will start eating up natural gas stocks (boil) and prices will drop to their lowest levels after a possible bearish EIA forecast this week.

However, these stocks can get a price hike if the cold weather continues, not just for a couple of weeks but into the spring:

Cheniere Energy (liquefied natural gas); tellurian (I say), always power (SRE), superior energy (Any)

conclusion

The big engine in the power plant lately has been using heating oil and gasoline (Uga). Heating oil is also a distillate fuel (diesel) used in trucks and airplanes. Increased demand by China and cold weather in the United States and parts of Western Europe helped drive up prices. For natural gas, I’m not very bearish (UNG), as I have been with my clients most of this winter. With that said, I can’t say with great confidence that there will be a huge price hike, even with the return of cold weather. However, selling money put options in natural gas may be warranted for seasoned investors on the chance they start eating natural gas stocks during the spring.

One can see how it predicted the frequency of snowfall in late January and February and colder weather very early and sampling Weather Wealth newsletter or BestWeather monthly report.