Oil & Weather: A Guest Persepective

Thursday, December 02, 2004 | 05:39 PM

Back on the anniversary of the crash, I ran a guest post from Rob Fraim: 1987 Crash Revisited. That was well received; I thought Rob's latest missive was worth reproducing here:

In the midst of the recent big drop in oil – which is likely at least partly due to forced/margin selling – there is an interesting point to be considered.

Writing on the financial website Street Insights, Richard Ritholtz [Editor: no relation -- as far as I know] made the following comments today:

· It's too early to write off the winter even though the weather has been quite mild in the Northeast and Midwest to date.

· Heating oil inventory is still at a low absolute level, although it is clearly in a building mode over the next weeks.

· The market experienced significant long liquidation yesterday as several large funds locked in their profit for the year; December 1st clearly signaled that year end is not far away.

· Based on information from several private forecasters, I believe that the overall winter temperatures from Dec. 21- Mar. 21 will be average to below normal even, though the November through early December temperatures have been milder.

As to the weather (ok…cue the “Let’s Make Fun of Rob Fraim” theme music here) here is something of interest (or fun if nothing else):

The Old Farmer’s Almanac has a noteworthy record for medium-to-longer range weather forecasts.

Oh, I know you’re laughing at me now. You’d rather pay attention to Skippy the Weatherman on your local Accu-Weather at 6:00 who can’t, for Pete’s sake figure out whether it’s going to rain tomorrow. (And who each year predicts 4 huge snowstorms that never materialize and misses on the blizzard that blindsides you.)

The Almanac states:

“… although neither we nor any other forecasters have as yet gained sufficient insight into the mysteries of the universe to predict the weather with total accuracy, our results are almost always very close to our traditional claim of 80 percent.”

(By the way, they have to make their weather predictions over a year in advance due to printing/publishing timeframes, etc. So that’ ain’t too shabby.)

What is the methodology?

“We derive weather forecasts from a secret formula that was devised by the founder of this Almanac, Robert B. Thomas, in 1792. Thomas believed that weather on Earth was influenced by sunspots, which are magnetic storms on the surface of the Sun.

Over the years, we have refined and enhanced that formula with state-of-the-art technology and modern scientific calculations. We employ three scientific disciplines to make our long-range predictions: solar science, the study of sunspots and other solar activity; climatology, the study of prevailing weather patterns; and meteorology, the study of the atmosphere. We predict weather trends and events by comparing solar patterns and historical weather conditions with current solar activity.”

OK, I don’t know if it makes sense or works or is hogwash. But then again – 80% accurate vs. Skippy the Moron…

Overall the Almanac is calling for some wild winter weather – colder than average in lots of places and some a little milder.

For example, my region is as follows:

“November through January will be mild, with little snow and milder-than-normal temperatures, but by the end of March, winter will be remembered for above-normal snowfall and below-normal temperatures, on average, especially in the south. The coldest periods will be mid-December, mid-January, and from late February through mid-March. The heaviest snowfalls will occur in early, mid- and late February and early and mid-March.”

The upper mid-west area says: “Winter will be colder than normal, with above-normal snowfall in the east and below-normal snowfall in the west. After a cold November, December through early February will be much milder than normal, on average. The remainder of February through mid-March will be exceptionally cold. Other cold periods will occur in late December and mid-January. The snowiest periods will be near Christmas and in late March.”

I’m not going to cut and paste all 18 regions here. However, if you would – for the sake of fun or for the sake of business– like to know what the Old Farmer’s Almanac says, drop me an e-mail, give me a call, or IM me at rfraim9203.

Holler at me and I’ll tell you what your region or any other key weather regions (northeast, etc.) look like according the Almanac.

Now if you’ll excuse me I have to go consult my Ouija Board and voo-doo bones.

-Rob (Who Wishes His Stock Picks Had an 80% Success Rate) Fraim

Thursday, December 02, 2004 | 05:39 PM | Permalink | Comments (1) | TrackBack (0)
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Very good Thank author this article is quite good!

Posted by: 张家界 | Jun 19, 2005 12:35:01 PM

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