US gas traders brace for a third straight warm winter

Bloomberg

Natural gas traders are facing the possibility of another mild US winter. Temperatures from December through February will be above normal for much of the southern US, East Coast and Northeast, the US Climate Prediction Center said in a report.
A run of “beautifully mild weather” this autumn has already weighed on the market, said John Kilduff, founding partner at Again Capital LLC in New York. “This relative warmth this late in the season here is just a killer for the bull case,” he said in a phone interview.
The forecast does hold a silver lining for gas bulls, who have seen a supply glut weigh on prices for much of the past two years. Key gas-consuming markets in the Midwest have an equal chance of being warmer or colder than normal. There’s also the possibility of a weak La Nina developing in the equatorial Pacific, which can lead to colder winters in parts of the US.
“We expect it to be warmer than average but we are not expecting the record warmth we had in the last two winters,” said Mike Halpert, deputy director of the US Climate Prediction Center.
SIXTH MILDEST
The winter of 2015-2016 was the warmest on record, while last year was the sixth mildest going back to 1895, according to the National Centers for Environmental Information. Meteorologists measure winter from December 1 to Feberuary 28.
The forecast is closely watched by gas and energy markets as winter months make up the heart of the heating season, when the most fuel is burned in the US Nearly half of all US homes are heated primarily with natural gas, the Energy Information Administration said.
Natural gas futures for November rose 1.9 cents to settle at $2.873 per million British thermal units on the New York Mercantile Exchange after recouping early losses. Prices are still down 4.2% this week. Futures have swung between gains and losses in the past month as traders scrutinize forecasts for clues about likely winter temperatures during the peak heating season.
There’s a 67 percent chance for a weak La Nina some time from December to February, up from 61 percent last month, the US Climate Prediction Center said last week. Shifts in the Arctic Oscillation, an index of the state of the atmospheric circulation over the Arctic, can also bring frigid temperatures into the US heartland. If La
Nina doesn’t develop, there could be major changes to the winter
outlook when forecasters revisit it next month.