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February snow could dig into sky-high U.S. fuel inventories
January 26, 2016 / 10:42 PM / 2 years ago

February snow could dig into sky-high U.S. fuel inventories

NEW YORK, Jan 26 (Reuters) - The blizzard that battered the U.S. East Coast over the weekend may be just a taste of what is to come, as February is usually the snowiest month and is likely to be snowier this year because of the El Nino weather phenomenon, weather experts say.

The historic storm paralyzed much of the heavily populated East Coast and snowy gridlock closed government and businesses in Washington for 2-1/2 days.

More snow heading into February, beginning with flurries expected in some parts of the northeast on Thursday and Friday, could boost demand for home heating fuels and begin to dig into inventories as storm-related disruptions keep people at home.

“People who would normally be going to work yesterday and today aren‘t,” said Aaron Studwell, weather operations manager for Wilkens Weather in Houston. “People who would put the thermostat at 66 when they went to work now keep it at 70, and you’ve got millions of people doing that.”

Central Park in New York City has received an average of 9.2 inches (23.4 cm) of snow in February, according to National Weather Service data dating back to 1868, compared with 7.9 inches (20 cm) in January, 6.2 inches (15.7 cm) in December and 5.5 inches (14 cm) in March.

“Typically, El Nino means a much more active storm track across the southern U.S.,” said Todd Crawford, chief meteorologist with Weather Services International in Andover, Massachusetts. “Along the East Coast specifically, I think we’ll have a snowy month.”

But even if snow does help boost fuel demand, it is unlikely to make a big enough dent in stocks built up during the mild winter, lending little support to tumbling crude oil and weak natural gas prices.

“It won’t be enough to make up for it,” Studwell said. “We’re going to hit into it a little bit, but make up for it? No.”

The last week of January has historically marked the peak of cold winter temperatures in the United States. If that pattern holds true this season, the winter would be the warmest, by far, in years.

Based on the number of heating degree days (HDD), or the number of degrees a day’s average temperature is below 65 degrees Fahrenheit (18 degrees Celsius), December was 42 percent warmer than normal and January, so far, has been 3 percent warmer than average.

As a result, natural gas stockpiles are expected to hit their highest season-end level since 2010 in March, at 2 trillion cubic feet.

Regional inventories of distillate, used to make both diesel motor fuel and heating oil, are at their highest levels in more than five years.

And while a delayed winter is not unprecedented - February 2015 had more HDDs than January - meteorologists say this year’s El Nino makes that an unlikely outcome.

Reporting By Luc Cohen; Editing by Sandra Maler

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