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Thursday, January 31, 2019

Wild weather: Energy traders scramble to cope with arctic blast's abrupt end

It appears the polar vortex's days are numbered, and the situation is hitting natural gas prices.

According to The Weather Co.'s senior meteorologist, it's sending traders scrambling this week to adjust to the changing forecast.

"This is one of the more dramatic changes I can ever remember," Daniel Leonard said Thursday on CNBC's "Futures Now." "You don't normally see stuff like this, and this is giving our traders a lot of angst."

The new forecast calls for spring-like weather to blanket about three-quarters of the country.

"We're talking about going from minus-50 wind chills in Chicago yesterday and today to plus 50 degree temps over the weekend," he said.

While temperatures colder than Antarctica grip parts of the nation, traders are looking to unwind natural gas trades to cope with next week's milder weather. The commodity, which is closely correlated to the weather, has already fallen 9 percent over the past five sessions.

"It's really hard to get traders excited when you only have a couple of days worth of cold interspersed in a warm overall pattern," he added.

Even if the weather turns cold again in February and March, Leonard isn't sure if higher natural gas prices will hold.

"I can remember the polar vortex winter of 2014. In that particular winter, the reason why nat gas prices were so high that year is because the cold was sustainable. The polar vortex kept on coming," Leonard said. "This time around, it comes down for just a few days, and then it bounces right back out like a yo-yo."

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