Two Resources for Energy Insights

This column was originally published on RealMoney on Dec. 8 at 2:14 p.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Because it's the holiday season, it's time to make a list and check it twice.

In the case of energy investors, December is always a good time to think about what will shape the energy markets into the end of the year and as we jump-start the New Year. December can be an important month for energy: Winter begins, exploration companies begin to set their 2007 plans and all companies wrap up the budgeting process for the coming 12 months.

So, as has become the custom, let's look at a couple of drivers that could be in play during the last month of 2006.

Watch the Weather

One of the more important variables in predicting energy-commodity prices in the month of December is weather. Winter officially begins the middle of the month, and bone-chilling cold is bullish for the energy markets. In fact, last year's historically warm winter was the primary cause of the swoon in natural gas prices this past summer.

Hence, all energy investors have at least one eye on the forecasts, especially the longer-range forecasts for January and February. So I decided to check in with Chesapeake Energy(CHK Quote), the large natural gas producer, which has its own uncannily accurate meteorologists. Cheapeake's meteorologists were some of the few who accurately predicted last winter's warmth.

The accuracy continues. My sources suggest Chesapeake's forecasters were spot-on in predicting last week's cold-and-snow snap through the upper Midwest. The Chesapeake gang's forecast for the coming week suggests slightly warmer-than-normal temperatures, followed by a holiday cold snap that, if it happens, could help rally energy prices.

More important, the Chesapeake weather team sees a more normal winter season come 2007, compared with the past 30 years. That means that, when compared with the last 10 years (which have been consistently warmer than longer-term norms), winter weather should be colder than normal, a positive for energy investors.

< Previous

1 2

Next >