Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Pandemic magnifies uncertainty amid NOAA's forecast for active hurricane season

Commodities | Coal | LNG | Natural Gas | Natural Gas (North American) | Oil | Crude Oil | Steel | Shipping | Coronavirus

Market Movers Americas, Aug 3-7: Brent-WTI spread at widest since May

Electric Power

Platts M2MS-Power

Energy | Electric Power | Electric Power Risk

Nodal Trader Conference, 13th Annual

Natural Gas

FEATURE: Dominion South rally unlikely to fuel Appalachian production growth in 2020

Pandemic magnifies uncertainty amid NOAA's forecast for active hurricane season

Highlights

Agency predicts 13 to 19 named storms in 2020 season

Three to six Category 3 or higher

Coronavirus to exacerbate supply, demand uncertainties

New York — The 2020 Atlantic hurricane season will be a busy one, according to an outlook published Thursday by the US National Oceanic and Atmospheric Administration, which predicted a 60% probability for above-normal activity.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The agency's forecast anticipates 13 to 19 named storms, reserved for disturbances generating wind speeds of 39 mph or higher. Among those, NOAA expects to see six to 10 hurricanes and three to six major hurricanes of category 3, 4 or 5 – all of which generate wind speeds of 111 mph or higher. NOAA provided the storm prediction ranges with 70% confidence.

The agency's forecast does not predict the number of storms likely to make landfall, which it says is determined largely by prevailing weather patterns around each storm at the time of its formation.

Click here for full-size image

While the official 2020 hurricane season does not begin until June 1, the Atlantic has already seen its first named disturbance this year – Tropical Storm Arthur, which formed on May 16 and brushed past the Outer Banks of North Carolina before dissipating.

During an average hurricane season, the Atlantic sees 12 named storms, six hurricanes and three major hurricanes. The 2019 season saw 18 named storms, six hurricanes and three major hurricanes.

Critically, NOAA's outlook does not predict the frequency of disturbances smaller than a tropical storm, which lie outside its predictive capacity but have previously resulted in significant damage caused by flooding.

AMPLIFIED UNCERTAINTY

For US oil, natural gas and power markets, the approaching storm season brings additional uncertainty this year caused by the ongoing novel coronavirus pandemic. US and global responses have recently wreaked havoc on product supply-demand balances and could affect how the domestic industry responds to landfall of a major storm this year.

Along the US Gulf Coast, elevated product inventory levels could cushion the supply chain in the case that flooding or winds cause infrastructure damage, shuttering operations at individual refineries or other facilities.

"The X factor there, though, is how rapidly [recently lost] demand comes back," said Ken Medlock, professor and senior director, Center for Energy Studies at Rice University's Baker Institute.

Amid heightened concern over the virus, people are tending to opt increasingly for private, over public, transport, Medlock said in telephone interview this week.

"That has repercussions for fuel demand," he said, warning that the strain on gasoline supply could actually be higher this summer, despite efforts to keep many people working from home.

"There's just a massive amount of uncertainty," he said. "As we move into June, we'll get [some clarity] on what demand is going to look like and what a storm could do."

Fuel distribution networks face similar uncertainty. While lower global demand from the coronavirus is expected to curb US crude exports, flows remain three times higher than when Hurricane Harvey hit the Houston area in 2017.

Medlock points out that increased automation over the past 20 years has also made many parts of the oil and gas supply chain more resilient, potentially increasing capacity to keep certain operations up and running, even during major hurricanes.

POWER MARKETS

As during previous hurricane seasons, storms making landfall this year will likely cause power outages, putting additional pressure on power sellers already strained by pandemic-related demand destruction.

Peakloads dropped almost 30% below prior five-year averages on the hardest-hit day of Hurricane Harvey's presence in the Electric Reliability Council of Texas, system operator data shows.

Hurricane Florence cut power demand in the Carolinas by almost 20% in comparison with the previous three-year average on its worst day, US Energy Information Administration data shows.

"I would assume that downward pressures brought on by COVID-19's drop in load would only be exacerbated by long outages caused by damage," said Wei Du, energy and utilities expert at PA Consulting.

Regarding service restoration, Tulane Energy Institute Associate Director Eric Smith said, "Even without hurricanes, utilities are already having difficulties with staffing up for long-scheduled nuclear refueling projects. Hurricanes will only make that scheduling uncertainty worse, and there are not a host of 'Plan B' options available."

Repair crews are "generally ... quite reliable, but those crews will resist relief work that carries with it exposure to infection," Smith said Wednesday. If major hurricanes do make landfall "[service restoration] will be worse than what we experienced in Katrina or Sandy because the relief options are not as certain," he said.

Joshua Rhodes, a University of Texas Webber Energy Group research associate, said regional crews could be separated "if planned well."

According to Du, the unknown is how utilities will deal with crew safety, and the willingness of crews to travel. One option he pointed out would be for central supply depots to offer alternative, more dispersed accommodations to restoration crews, like sleeper trailers or even tents.