“March is theoretically the last month of winter but the market is looking beyond,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in Houston. “It’s looking at relatively mild conditions, so lots of excess gas and no place to burn it.”
Viswanath said that at this time of year, a cold snap tends to lack the punch, and therefore the impact on energy markets, that a frigid blast in January can provide.
A day where the temperature falls below normal in Chicago can mean a 1 billion cubic foot swing in inventory in January and half that in March, she said.
“It is a significantly different story that develops in March,” Viswanath said. “So now we’re in the last month and we’re looking into the shoulder season and there is not a lot of support of the gas market.”
The Arctic and North Atlantic oscillations, changes in pressure over the North Pole and the northern Atlantic Ocean, were major contributors to the mild U.S. winter, said Jon Gottschalck, head of forecast operations at the Climate Prediction Center in Camp Springs, Maryland.
Through November, December and the first half of January, the Arctic Oscillation was positive, which meant cold air stayed at the pole, Gottschalck said.
In the second half of January, it flipped to negative and frigid polar air started heading south. Then something unusual happened, he said: The North Atlantic Oscillation remained positive.
Instead of cold Arctic air being trapped in the U.S. to freeze large cities, it kept right on going.
“We’re not sure why,” Gottschalck said. “That’s just the way it worked out this year.”
While damping natural gas prices, the milder winter weather probably was positive for the economy in general, said Thomas J. Teisberg, a weather economist and president of Teisberg Associates in Charlottesville, Virginia. People who saved money on heating bills probably spent it elsewhere, he said.
State and local governments benefited because they didn’t have to spend as much on snow and ice removal, said Jim Koermer, a professor of meteorology at Plymouth State University in New Hampshire. At the same time, ski resorts spent more making snow and many retailers missed out on selling snow shovels, which are a last-minute item, Koermer said.