Happy New Year! We will be taking a deeper dive into weather here in a few paragraphs, but let’s start out the new year with a quick note from Flashpoint’s Darius Lechtenberger:
‘WTI crude oil and refined product prices are on the move upward this morning. It appears that escalating tensions in the Middle East are to blame. Reuters is reporting that the risks of the Israel-Gaza conflict morphing into a wider regional conflict rose over the weekend after U.S. helicopters repelled an attack by Iran-backed Houthi militants on a Maersk container vessel in the Red Sea, sinking three Houthi ships and killing ten militants. The attacks were expected to be curtailed as a U.S.-led coalition was created to patrol the Red Sea. Still, U.S. allies have proven reluctant to commit to the coalition, with nearly half not declaring their presence publicly. Also helping to support crude oil prices is an expectation that the Chinese Government will soon provide more stimulus to their languishing economy as their manufacturing activity declined beyond expectations in 4Q23. Propane prices surged higher last week as a short squeeze highlighted the expiration of the December 2023 contract. I expect propane prices to weaken to start the new year.’
Propane prices rallied last Friday to close December at their highest levels for the month. Conway’s average was just south of $.7300/cpg, while TET was just north of $.7100/cpg, marking one of the few days in 2023 where Conway’s average close was higher than TET. You can see in the image below that Conway saw a low to high price swing of over $.1000/cpg for the month while TET’s range was more narrow:
Let’s begin the New Year by talking weather forecasts….and perhaps a nice little gift for each of us to begin this new year.
The video on the right is from BAM’s Michael Clark, and when Clark is on a video, I liken it to when we see Jim Cantore show up on The Weather Channel. It means that some exciting things could be in the offing.
1-1-24 Cold & Stormy Pattern Coming!
The ‘exciting things’ continue to be signals from the atmosphere that a perturbance of the Polar Vortex will happen, and the possibility of at least a lobe of the Polar Vortex coming down into our side of the Northern Hemisphere. The video from Clark is a welcomed relief from the blow torch many of us experienced in December, which was the second-warmest December on record for the US as it relates to Gas Weighted Heating Degree Days. Here is a look at the current forecast for the next four weeks, with weeks one and two on the left and three and four on the right:
It’s great to see some blue and purple for a change! BAM’s current January forecast for GWHDDs is 895, compared to 798 last year, and 938 on the 30-year average vs 924 on the 10-year average. That’s because the next eight days or so still look to be warmer than normal for a lot of the country, as seen below:
As Clark reminds us in the video that I linked above, there is always the possibility of a curve ball or two this far out, but the modeling continues to see a split of the Polar Vortex, and the closer we get to the time where it is being predicted, and the data is still seeing it, confidence grows. Now, the models are not all in agreement. Here is a cluster shot of over 100 weather models, and they are grouped into the outcomes each is predicting.
Both the left and center images have 34 models agreeing with the displayed outcome, while the far right image has 35 models agreeing with that look and shape. Regardless, IF we get a split of the Polar Vortex, the location will depend on where the ridge over Greenland will be located. If that ridge is farther west, then the cold in the US will be more west-centered. If the Greenland Ridge is farther east, the core of the cold will be located more central to the east in the United States. Things should become more clear towards the end of this week.