Coldest Winter in a Decade

Cold Weather Score: Coal 1, Global Warming 0

Oil and Energy Commodities Race

Oil and Energy Commodities Race

And it is very interesting that KOL, the coal ETF, is on a rocket ride. Looks like the score is “Reality One, Global Warming Scare Zero” at least when it comes to coal prices in a cold winter…

Just heard an interview today (Oct 19) on Bloomberg with a group that specializes in investment weather consulting. They were asked about “Climate Change” and “Global Warming”… Their position was that the U.S.A. and in particular the North East would have the coldest winter in a decade. Interesting in part because this story, and the same source, came around a few weeks ago, as covered here:

http://wattsupwiththat.com/2009/09/29/weak-el-nino-could-lead-to-u-s-northeast-coldest-winter-in-a-decade/

And yet, we have it “again”. While it is probable that these folks are just touting their own positions and pushing their service, it is also the case that they are sticking to their guns on this one. (Not all that hard with October snow all over the North East). It looks to me like a weather organization that can call the shots right and can make you some money. Their web site is here, though it looks like the interesting bits are subscription only:

http://www.commoditywx.com/

The earlier Bloomberg story is here:

http://www.bloomberg.com/apps/news?pid=20601087&sid=amm7GJfWypJE

Note the “Update 2” in the story title and the September 28 date….

U.S. Northeast May Have Coldest Winter in a Decade (Update2)
By Todd Zeranski and Erik Schatzker

Sept. 28 (Bloomberg) — 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.
[…]
“It could be one of the coldest winters, or the coldest, winter of the decade,” Rogers said.

If you want to hedge your home heating cost, the exchange traded tickers are UHN for heating oil, UNG for natural gas, and UGA for gasoline. I prefer the oil trusts (and did a WSW focus on them about 3 weeks ago) and I’m holding PWE as a major holding. LINE is another good one (and frankly, I don’t know yet if my order executed or not, so I’m not sure if I own it yet… oh, the joys of “limit orders”…) So if you just can’t quite buy that $400 of oil and take delivery today, you can still buy UHN while you wait.

The UHN chart looks like a nice bottom is in and turned higher. It is a bit of a “flat roller” which is why I like the “trusts” better. If you do buy UHN, wait for a down day to do it. The oil trusts send you a dividend each month AND rise if oil prices rise while UHN just moves with heating oil prices. PWE and LINE have been doing well and have a nice dividend.

UNG is “on the bottom”. We have found a heck of a lot of natural gas in “tight shale”, so don’t expect a rocket ride out of this one, but with summer A/C demand being off and industrial demand having been down due to the recession, a rise in demand on cold weather and economic recovery is very likely to lead to some price rise. Coming off a hard bottom has more percentage gains than a momentum trade later, though the bottom fishing trade is more nerve wracking. (A double from $3 to $6 per gas unit is easier than a return to last years $12 from that $6 point…)

About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Wall Street Week... and tagged , . Bookmark the permalink.

3 Responses to Coldest Winter in a Decade

  1. Jeff Alberts says:

    Well, you know, they’ll just say global warming can cause global cooling. Or that it’s just a temporary blip, like the MWP.

  2. E.M.Smith says:

    I think we’re headed for another “blip” but one more like the Little Ice Age than the Medieval Warm Period.

    Hmmm…. Given the recent “issues” about cold vs warm 2008 and 2009, it would be a reasonable “proxy” to look at the annual heating oil sales by year. The data ought to exist and ought to be fairly well correlated with cold over the decade time scale (modulo events like the ’70s Arab Oil Embargo that caused some conversion away from heating oil…)

  3. Doug says:

    Global warming bites again by the looks of it !

Comments are closed.