Good Morning,
Not a lot of news; a bit dryer in the northwest, slightly cooler but not cold.
Most telling is the lack of precipitation beyond 10 days and worthy of our attention. The front-end precip will keep the Mid-C basins at, or slightly above, normal which pretty much locks in the Feb official water supply at today’s numbers:
The important point here is the month-on-month changes at GCL and TDA – both of which are up 3% from the numbers used in the initial flood control drafts. In other words, expect a slightly deeper draft when the Feb is released in the second week of that month.
Northern California is teed up for another big storm system, this one dropping over an inch across the state:
As January expires we can toss out the old El Nino playbook – dry northwest is just not a statistical reality any longer. It’ too bad because this was the only long-term tool for predicting water anomalies.
Renewables have backed down rendering the Mid-C a touch more bullish. Couple that with falling temperatures and we have some moderate hints of bullishness for Feb. Nothing to cause over excitement but enough to suggest the sell-off in the front is done.
We still like owning the March Mid-C and would not be short going into Feb. The Q2 is another story and we have been biased short for the last few weeks. Nothing has changed in that sentiment, especially given a bigger draft in April. At some point Mid-C will trade in single digits but when that occurs will depend on temperatures. April could be the month, during the draft, but that month can also be notoriously cold.
Mike