Extreme price volatility in energy markets is most commonly associated with surprises attributable to weather related events. High demand for heating during a cold winter is the most obvious example. In recent years, hot summer weather has also become a significant factor as energy demand fluctuates with rising air conditioning loads. A final example is hurricane and tropical storm activity which, during the late summer/fall can have a significant impact on Gulf energy production. The bottom line is that weather is still a major driver of energy prices, especially as it relates to volatility in the near term. Short and Long term weather forecasts are available through the NOAA’s Climate Prediction Center and the National Hurricane Center.
