Since Joe Bastardi published his Winter Forecast in July predicting a higher probability for a harsh winter, people seem to be clamoring for more information on what to expect.
Bloomberg, the financial news publisher/broadcaster recently released an article and an accompanying interview about the potential for the "coldest winter in a decade". Now, I'm sure you have two questions.
- Why would a financial network be presenting information on winter weather?
- Who they turn to for that information?
The interview covers this very well, but there is a simple answer. The harshness of the winter will affect heating oil and natural gas prices. Obviously, home and business owners would be affected. But, this also presents an investment opportunity for investors. Therefore, commodity investors (commodities being things such as oil, natural gas, crops, etc) get information from companies that track one of the major factors to affect the pricing of commodities - weather.
Watch the video for more detail than the article provides.Of particular note from the article:
The U.S. Northeast may have the coldest winter in a decade because of a weak El Nino, a warming current in the Pacific Ocean, according to Matt Rogers, a forecaster at Commodity Weather Group.
“Weak El Ninos are notorious for cold and snowy weather on the Eastern seaboard,” Rogers said in a Bloomberg Television interview from Washington. “About 70 percent to 75 percent of the time a weak El Nino will deliver the goods in terms of above-normal heating demand and cold weather. It’s pretty good odds.”
This forecast has caused the following reaction:
Hedge-fund managers and other large speculators increased their net-long positions, or bets prices will rise, in New York heating oil futures in the week ended Sep. 22, according to U.S. Commodity Futures Trading Commission data Sept. 25.
“It could be one of the coldest winters, or the coldest, winter of the decade,” Rogers said.
We really won't know if these forecasts are true until winter is in full swing