Fewer hurricanes than predicted have formed this season, but it is too soon for optimism.

A lack of hurricanes or significant storms in the first half of the 2010 hurricane season had many public and private forecasting groups revising their total seasonal numbers (for both hurricanes and named storms) downwards, and many in the natural gas trade were wondering if the season was going to be a bust.

The answer is “No.” While July was relatively quiet in the Tropical Atlantic Basin, things have changed dramatically over the last couple of weeks as we move into what we expected to be the most active portion of the 2010 season. At Weather Trends International, our hurricane forecasting group is not changing its original number.  

An article we wrote for E&P readers in mid-June, we called for a very active season, with more development skewed towards the Aug/Sept/Oct period.

At this point, there appears to be no reason to change those projected numbers.

The numbers originally issued called for 16 named storms, with eight tropical storms and four major hurricanes. Given the pattern that has developed, and that we expect to continue into early October, the final numbers could come in very close to the original forecast, issued to clients in April 2010.

Atlantic Sea surface temperatures have been warm all season, and that is expected to continue.  There is good convective activity off of the West African coast, and this, combined with a series of relatively strong tropical waves traveling westward across the Atlantic, will supply the energy for tropical system development. Early in the season, convection was present, but the waves had less energy, and as a result did not travel very far, usually dissipating before reaching the Central Atlantic. Now there is a strengthening in both the frequency and the intensity of these waves, and the result is a ‘parade of activity’ across the Atlantic Ocean.

This satellite image, taken the week of August 30, shows significant activity. (Image courtesy of Weather Trends International)

What is also helping the seasonal activity start to pick up is the shift to La Nina conditions in the Pacific. These conditions are associated with reduced shearing activity in the Atlantic, which is the opposite of what was experienced in 2009 when the El Nino dominated the global pattern. Reduced wind shear allows for more favorable conditions for developing storms to organize and mature.  

Weather wires were buzzing on September 8 with talk of Hurricane Earl. The excitement is warranted. This is a big system that is carrying a lot of energy. But don’t lose sight of what has followed behind Earl. While Fiona and Gaston were not a threat to the Atlantic coast, Hermine has caused a significant disruption to East Texas, with many highways currently submerged between Brownsville and San Antonio.

This storm was followed by another series of waves off of West Africa. As expected, the Tropics are heating up as we are entering the heart of the season.

Despite our early outlook for an active hurricane season, due to a number of both supply and demand side factors, natural gas futures have softened through late August. As this stage, even a surge in activity may not have the price impact that it would have had if the Topics had been active earlier in the season. Stockpiles are healthy, and at least the current storms worth watching appear to be steering clear of the Gulf of Mexico. But, that can change, so remain on for other developing systems, as anything heading into the Gulf at this point will at least provide some short-term volatility and related trading opportunities.

Producers and traders should start to take a longer view now, and begin thinking about how the supply situation will develop ahead of the North American heating season.