Good Morning,
I had a dream where an EL Nino Mid-C was Cold and Dry but alas, it was only a dream, and Mid-C is Warm and Wet:
In fact it is warmer and wetter than last week’s outlook and it is especially wet in the east where wet matters most:
That dream of back to back dry Mid-C years is morphing into a nightmarish (for longs) normal, and if these storms keep coming, a very wet year. If today’s forecast is just half right than the official Feb 1 water supply numbers should be equal to, perhaps exceed, the Jan 1 and the Flood Control drafts enhanced. Lots of ifs but worthy of yours, and our, due diligence.
Worth noting too is the “early” return of the DC, which is now scheduled to be back to 2990 as early as tomorrow.
That will help Mid-C and “hurt” SP especially given the fact that the Northern Intertie has essentially been south-bound full for weeks:
With cash spreads the way they are, wide, there is but one direction for them to go – less wide. The DC return has been priced in for Feb but not BOM, let’s see what the market thinks of the news today. For the record NP is also wet, this storm system is spraying water from Seattle to Santa Clara but seems to be sputtering the further north we go. The Peace is dry, in the 70th percentile, the stations above Mica are dry too, though southern BC is realizing similar anomalies as the northern US basins.
Our outlook remains bearish in light of the additional east-side precip and the very warm weather. My net book would be short, and would get shorter this week, but I’d probably cover all my BOM Mid-C shorts and move them into SP15. I would also start looking at Q3 Mid-C as a possible short candidate:
The bigger the water year the more likely the runoff spills into July making the Q3 very sensitive to that big water. We don’t have big water today but we don’t have dry either. Our forecast is already seeing some new runoff water in July and driving the price down – the market sees something else, not sure what that is.
Mike