Wednesday, July 03, 2019 at 11:09AM
We continue to track the status of our El Niño event, as the direction it takes can influence the temperature patterns in the U.S, and therefore impact demand for natural gas. El Niño in summer generally translates to cooler temperatures and lower gas demand. This worked out well for the month of June. Recent weeks have brought about a stark weakening of our El Niño event, however, as seen in the latest NOAA data. Despite the weakening, we still have warmer than normal sea surface temperatures in the equatorial Pacific out near the Date Line. Zonal wind anomalies are turning back westerly as well in this region, which simply means a weakening of the trade winds. We have highlighted this in the black box below, as well as the last two times this has occurred in red. These "westerly wind bursts" often tilt conditions more in the El Niño direction. The following image shows the buildup in heat content with each of the last two westerly bursts that were highlighted above. As such, one would expect to see some "bounce back" with the El Niño state in the near future. However, subsurface temperatures in the equatorial Pacific have cooled significantly the last few weeks, with a lot of cooler than normal water showing up. Could that be an indication that impact from this current westerly wind burst will be muted, potentially signaling the end of the El Niño base state? This is an important issue to tackle, as a re-strengthening of El Niño would keep the risk for hotter weather and higher natural gas demand mitigated, while a change in base state would increase the risk for higher late summer heat, and stronger gas demand. Our research can help keep you ahead of these potential market-moving changes. Sign up for a 10-day free trial here to take a closer look at all of the products that we have to offer, with much more to come in the near future.