Ferguson’s Forecast: Summer Has Begun

By Published On: June 11, 2005

Weather prognosticators forecast recently that this would be another active hurricane season. Today they seem prescient as tropical storm Arlene appeared early on the scene with 40-mph winds. It was centered near the western tip of Cuba and headed north. Winds up to 58 mph are expected as Arlene makes its way toward the central Gulf Coast. While Arlene is not expected to reach hurricane force, nonessential workers were being evacuated from Gulf oil and gas rigs. Production should not be affected, but memories of Ivan are fresh, and markets are nervous. The price of oil jumped nearly $2/bbl on Thursday to close at $54.23. Natural gas prices gained 6 cents to $7.06/MMBtu despite the expected large storage build reported yesterday for the week ending June 3. Arlene may have been partly responsible, but the market bulls should probably thank this week?s unseasonably warm and humid weather in the populous Northeast. Heating loads have virtually disappeared, but according to my model, air conditioning loads will increase gas consumption by about 35 billion cubic feet this week over last week. Gas demand is usually lowest in June, but that may not be true this year if warm weather continues. Gas in storage is now 265 Bcf above the five-year average (+16 percent). But the surplus is entirely due to mild weather during the last 12 months, which lowered demand by about 430 Bcf compared to the prior period. This week?s warm spell is just a reminder that Mother Nature can very quickly change gas demand. And Arlene?s big brother could come along any day to reduce supplies. So remember, have a nice summer, but keep that air conditioner turned down low.

Share this story

Not a member yet?

Subscribe Now