Are you prepared for a severe weather event? As America gears up to honor the legacy of Martin Luther King Jr. and the inauguration of President Trump, it appears much of the nation will endure an intense cold spell. I’m referring to the potential for a hazardous arctic blast, which is already influencing energy markets as they brace for an expected surge in demand for heating fuels, alongside worries of weather-related shortages.
How frigid will conditions get, and will it affect you? According to Fox Weather, ‘There’s no escaping this.’ The FOX Forecast Center predicts temperatures could drop as much as 45 degrees below average in some areas, resulting in sub-zero conditions across at least 20 states, stretching from the Plains to the Great Lakes and into the interior Northeast. This potentially life-threatening cold snap is due to a disrupted polar vortex.
The FOX Forecast Center indicates that a portion of the polar vortex will shift southward into the U.S. over the weekend and into the following week. “These are the kinds of weather patterns that can send cold air all the way to Florida,” noted Merwin. “Typically, we experience one or two events annually where an influx of arctic air reaches down to the Gulf Coast. This is one of those instances, meaning if you’re a snowbird heading to the South, you’re out of luck – everyone will feel the chill.”
Unfortunately, everyone will also face increased heating costs. Not only are prices rising, but your usage in January could be the highest it’s been since the 1970s.
However, one location where you might avoid the cold is the Red Sea, thanks to what can be termed the Trump Peace Dividend. Trump has warned Hamas of severe consequences if Israeli hostages are not released by his return to office on January 20. Reports suggest that the Yemen-based Houthis have signaled a halt to their long-running attacks on commercial vessels following a ceasefire agreement between Israel and Hamas. Thank you, President Trump! Welcome back to the White House.
Meanwhile, sanctions on Russia continue to strain supply chains across Europe, India, and China as they scramble for resources. Biden has imposed sanctions on 155 tankers involved in the Russian crude trade.
Elizabeth MacDonald, the host of the Evening Edit on Fox Business Network, reported that “LA firefighters are still fighting a perilous blaze that erupted yesterday at a lithium-ion battery storage facility in Monterey County, California. This facility is one of the largest lithium battery storage plants globally, and evacuations have been ordered because of the thick, toxic smoke emanating from the site.
Within this context, the market looks robust. As the February contract nears expiration, the March contract is likely to trade above $80.00 per barrel soon.
The market could experience a sharp increase over the weekend. Historically, we’ve observed that prior to polar vortex events, prices spike when the market reopens on Sunday night but may decline afterwards. We anticipate this trend will continue unless there’s a significant shift in the weather forecast toward milder temperatures.
Nonetheless, as I’ve mentioned previously, the critical factor for the natural gas market may not be the current polar vortex but rather what February holds. If temperatures are colder in February, the movement in natural gas prices may just be beginning.
