How to Trade the Coldest Outbreak in 30 Years

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James Denaro monitors stock prices at the New York Stock Exchange, Wednesday, Feb. 26, 2020. (AP Photo/Mark Lennihan)

With the coldest outbreak in over 30 years, natural gas and oil prices are spiking.

All as blackouts and bitter cold temperatures grip a large part of the U.S.  In addition, the unusual cold in Texas, which churns out about 4.6 million barrels a day – has been brought to a standstill.  Exxon for example had to shut down part of their oil refineries.

According to Weather.com:

  • Dallas-Fort Worth dropped to minus 1 degree. That’s the coldest temperature there since it hit minus 1 in December 1989. It’s only 7 degrees shy of the all-time record low of minus 8 degrees set in 1899.
  • Oklahoma City recorded its second-coldest temperature on record with a low of minus 14 degrees. Only a minus 17 degree reading in 1899 is colder in the city’s weather records.
  • Lawton, Oklahoma, set a new all-time record low of minus 12 degrees. Records in the city date back to 1912.
  • Fayetteville, Arkansas, set a new all-time record low of minus 20 degrees.
  • Tyler, Texas, tied its all-time record low of minus 3 degrees set in 1930.
  • Tulsa, Oklahoma, dropped to minus 13 degrees. That matches the coldest reading there since it hit that mark in 1918.
  • Shreveport, Louisiana, had its coldest morning since 1930 with a low of 1 degree.

“It’s a shocking situation,” said Cody Moore, head of gas and power trading at Mercuria Energy America, as quoted by Bloomberg. “It’s chaos. It’s crazy with the prices.” Mercuria booked hotel rooms for some of its employees in the Houston area so they could walk to the office instead of driving on icy roads. “Our first priority was to do whatever we can to keep the grid moving, the gas flowing properly, clients informed and regulatory agencies updated where required.”

While you can run out and buy oil and natural gas stocks on the cold snap, wait.

Once temperatures begin to warm up, most of the cold weather runners could offer plenty of opportunity on the short side.  We’ll keep an eye on a few of those potential opportunities.

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