The possibility of mass destruction in the southeast hurricane region of the U.S. is low this year according to Colorado State’s latest hurricane forecast. Oil traders don’t like the data as we see a sell-off in crude. The WSJ reports:
NEW YORK — Forecasters Tuesday trimmed the expected severity of this year’s Atlantic hurricanes, saying they expect a “slightly below average” season.
The season, which began Monday and runs through Nov. 30, is expected to feature 11 named storms, including five hurricanes, two of which will be intense, with sustained winds of 111 miles per hour or greater.
In April, the forecasters, from Colorado State University, said they expected 12 named storms, including six hurricanes, two of which would be intense. Long-term averages are 9.6 named storms, 5.9 hurricanes and 2.3 major hurricanes a year.
Forecasters said the reduced forecast is based on a cooler-than-normal tropical Atlantic and the greater potential for a weak El Niño during the bulk of the hurricane season. El Niño refers to the unusual warming of the waters of the equatorial Pacific Ocean, which can have broad impact on weather.
“We believe that there is a slightly greater chance of a weak El Niño developing this summer/fall than there was in early April,” said William Gray, who is beginning his 26th year forecasting hurricanes at Colorado State. “El Niño conditions would likely increase levels of vertical wind shear and decrease Atlantic hurricane activity.”
I am still of the belief that oil is not trading on its fundamentals, but rather a strong seasonal trend and traders that are getting a bit ahead of themselves in terms of future potential demand increases. The oil markets are likely to remain firm into the July 4th holiday as they usually do, but could be at risk of substantial downside if the fundamentals don’t confirm the move. If the economy shows any signs of retrenchment we could see a repeat of 2008 though on a smaller scale….