Around the Desk Lots of News Around the Desk This Week… The Amaranth and Energy Transfer Partners announcements kept us all busy this week, but there were a couple other bits worth noting…Energy stocks took it on the chin again this week as the Dow cratered around 400 points on Thursday, the second-worst trading day of the year... Emissions Desk Businesses are catching on about the upside of climate change, both in terms of new products and opportunities, but they’re a bit vague on the details when it comes to downside risks. Desk Chiefs The one-two punch from FERC and the CFTC against Amaranth, Brian Hunter and very likely some of his former merry men this week was big, big news. But the details once they became better known, were a bit, well, odd... Gas Storage Box Scores & Market Buzz Another Week, Another Revision, Er, Reclassification. A revision by any other name, eh? In three weeks, 17 Bcf of changes to the weekly tallies. It’s a significant number by any standard. This week, unlike last time, the reclassification of base-to-working gas made just about everybody come off looking like a genius storage forecaster... CFTC Lands a Big Fish More Details on the Taking of Amaranth Wednesday was an altogether good day for Greg Mocek, the CFTC’s venerable enforcement chief. After a yearlong investigation into multiple counts of alleged mischief on the part of defunct hedge fund Amaranth Advisors and its principle gas trading wizard, Brian Hunter, it all came together this week as charges... The Desk Energy Curves Exclusive Forward Price Data Provided by Energy Curves LLC Power Stats & Intel NRG Stream   Credit Risk Desk And More! Subscribe Now

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Place yer bets, folks, lots of weather forecasting outfits are posting their latest two- and three-month forecasts and we’re finding out from some of them that we may be looking at a cold Winter. As for the Fall, everybody seems to agree we’re looking at a mild September and October.

WSI Energycast’s latest three-month outlook calls for warmer-than-normal temperatures in the Northeast and cooler-than-normal temps in parts of the Southeast and in the major population centers along the Pacific Coast. The month-by-month forecast seems to signal a very robust storage situation heading into the Winter. For September, the Northeast and the Southeast will be warmer than normal. In the North Central, with the exception of Wisconsin and Michigan, all states are expected to be cooler than normal. Injections to gas storage are likely to be slightly higher than normal due to the lower probability of late-season heat in most areas. In October, everywhere but California is expected to be warmer than normal. The Northwest is expected to be cooler than normal. Injections to gas storage are likely to be above normal as warmer temperatures delay the need for heating. In November, with the exception of Texas and California, all states are expected to be warmer than normal. Natural gas demand for early-season heating should be below average due to warmer temperature expectations across the northern tier of the country.

Houston-based Weather Insight’s latest Eagle’s Eye forecast for temperature patterns for August-October 2008 is as follows: Below-average temperatures across the northern tier of the US; Considerably below-average temperatures in the Great Lakes region; Above-average temperatures in the area from New Mexico eastward to Georgia; and well above-average temperatures will continue in Texas. Weather Insight’s forecast precipitation patterns for ASO is calling for above-average precipitation in a large region from the Great Lakes region south to Tennessee and into the northeastern US. Above-average precipitation is forecast in the Northwest. Below-average precipitation is forecast for the region from far western Texas and eastern New Mexico along the southern border to northern Florida.

Steve Gregory of Weather Intel Services sees “no ENSO event in sight” and thus “will make the upcoming Winter Outlook especially difficult to make.” He will lower the probabilities of being correct for all forecast services. “The accuracy rate could be little better than chance at long lead times and a Winter forecast issued in late October.” He says that this compares with mean accuracies for temps that can be over 80 percent during a strong ENSO event. “Critical indicators will include Arctic ice cover, snow depth and extent by Nov. 1 over Siberia and SE Canada, long-term trends and climatological cycling of various hemispheric indices.”
  That said, he says there is a clear signal for strong westerlies and a shift into a negative NAO to dominate the Fall season. “Combined with a slight bias for a ‘close but no cigar El Niño’ – as well as long-term trends and analog years -- a mild but not extreme warm bias is expected over the southern US that will come about as above-normal storminess should take hold in November.  Still, absolute temperature anomalies support relatively robust-to-strong storage builds through October.”

Finally, weather rockstar Dave Melita says that “ENSO conditions are weakly warm and this neutral condition is forecast to dominate the remainder of 2008.”
He says that hurricane activity, which is already above average, will continue to ramp up from late August through October, with the Gulf of Mexico and the Gulf Coast the favored targets.

“Despite overwhelming computer model consensus of a late Summer surge of above-average heat and humidity into the Midwest and East, the milder pattern that has dominated July and August is forecast to redevelop for most of September. The late Summer heat and humidity is not expected to be as intense or of as long duration as that which occurred in early-to-mid June. This eastern warmth will be quickly followed by the refocus of above-average heat into the West, with milder seasonal temperatures resuming across the northeastern quadrant of the country for the majority of September.”

He says that during October a marked transition to a colder pattern is forecast across the majority of the West, compared to the lingering above-average warmth of September. Early season cold air outbreaks are expected in the northern Rockies and northern Plains through November. The majority of October and November cold air outbreaks into the north central US are expected to modify as they spread eastward, such that mainly seasonal temperatures dominate the majority of the eastern half of the US.

Melita says that precipitation during Fall 2008 is forecast to be well above average in the majority of the eastern US.

“Once again the primary forecast components expected to drive the month of September are the resilient NAM and the ongoing surface saturation in the central US and Northeast. However, the NAM will have to ultimately break down due to seasonal transition processes and is not forecast to be in existence in October and beyond.”
Melita says that we may be looking at a “fundamental change in the making” that needs to be monitored as we progress into Fall. If a continued eastward expansion of warm water out of the central Pacific were to continue, it could negate the negative PDO signal in such a manner as to induce more extended periods of cold northerly flow out of Canada. Such a pattern could in fact make for an even colder Winter than observed last year. Instead of just being confined to the Plains and Midwest, cold air could more easily spread eastward. Bottom line is that the SST distribution adjacent to the West Coast of North America will be more important as we get into late Fall than it is now.