Typical Day of an Energy Trade Floor Meteorologist Part 106 Dec , 2011 | 18
There is so much to say about the typical day of an Energy Trade Floor meteorologist that I just can’t fit it all into one post. In my previous post about Energy Trade Floor meteorology, I discussed why Energy trade floor meteorologists were important for Natural Gas Trading operations. In this post, I’ll discuss what a typical “early morning” looks like for Energy Trade floor meteorologists on a Natural Gas trading floor, east of the Rockies prior to traders walking in the door. (I promise to also discuss power trading and the West of the Rockies region in future posts! )
Let’s also be real. Each energy trade floor shop is different so I can only speak from my own experience. In order to do effectively communicate this, let’s start with an example. Let’s pretend that the Natural Gas trading shop is in Houston for time zone purposes. And as I mentioned in an earlier post, Houston is #1 in hiring Energy Meteorologists.
A typical day starts by waking up at approx 4:00-4:30am. It obviously depends upon how far the meteorologist lives from work and how much analysis time the meteorologist needs. But most energy trade floor meteorologists are at the desk around 5:00-5:15am. Usually they are the first one’s to arrive on the trading floor. Ouch, I know.
The First Task: Do a thorough analysis of the weather fundamentals that drive Natural Gas. Most energy trade floor meteorologists have an average of 2-5 large monitors in front of them so they have the capacity to multi-task. I had the pleasure of having 11 monitors…which I’ll get into in another post So, the meteorologist will first analyze up to 15 days in advance all the major weather models (GFS op, GFS Ensemble, Euro op, Euro Ensemble)…maybe the Canadian op/Ensemble model too You will be looking at 0Z (or 6z) model output at this time early in the morning.
The most important weather variable on the model for Energy Trade floor meteorologists is the 850mb temperature chart. By using this chart, they can deduce surface temperatures in the future. And as many of you are aware, temperature is one of the major functions of heating and cooling demand (which drive Nat Gas prices). Of course, the energy meteorologist needs to know what is going on in the mid and upper levels too including 200 mb winds, 500 mb heights/vorticity maps, etc. It also is helpful to take a look at hemispheric plots…so they can get a global view of what is driving the weather patterns over the 15 day period.
The meteorologist should also have a look at the climate diagnostic charts…MJO, PDO, PNA, AO, NAO, El Nino/La nina, and other teleconnections. Many expert trade floor meteorologists are also checking teleconnection charts to see if there’s something the models may be missing too. It’s definitely not easy stuff!
And if it’s in between June and November, they are definitely checking for any hurricane updates or possible tropical storm formation mostly within the Atlantic/Gulf of Mexico area (anything that could potentially cause major shut-ins or destruction of Natural Gas and Oil refineries).
Frankly, there is never enough time to do a “thorough” analysis. The meteorologist has to be really quick…probably 30-45 minutes max. The meteorologist is under pressure to get their product (next step) done before traders walk in the door. Meteorologists can always alleviate the time pressure by coming in 30-45 min earlier…but that can also throw off their sleeping schedule (and social life) too.
The energy trade floor meteorologist also analyzes vendor forecasts. Depending on which vendor the company is subscribed to, they will communicate/show the vendor analysis and forecasts to traders which helps drive the perception in the market. Usually the vendor forecasts start rolling in around 5am. The top 3 vendors in this sector in the US are Earth Sat, WSI, and Commodity weather group. There is an entire post I still need to write about “vendor forecast perception vs your own analysis” which will be coming up soon.
The first Nat gas traders generally start arriving to the office at 6:30am (of course it varies by shop). Bottom line, the energy trade floor meteorologist needs to get this next task done before they hit the floor.
The Second Task: Natural Gas traders are used to seeing the entire country plotted in lines and circles represented by “above normal”, “below normal”, “normal”, much above normal, much below normal (and their extremes). The meteorologist separates these into 3 “categories”: 1-5 day, 6-10, and 11-15 which represents a forecast outlook and time period for each of these maps. And in case you didn’t figure it out, the lines and circles represent “temperature” anomalies from normal.
Here is an example of a 6-10 temperature map from CPC:
In general, energy trade floor meteorologists will draw their own maps for (1-5, 6-10, and 11-15), and then show the vendor maps compared to it. They may also include their written thoughts on each of the time periods and whether certain areas will have major heating or cooling demand. Once the product is put together, they are ready to communicate it to the traders. They have to be ready to “talk the jargon” of the traders..(ie “bullish or bearish”, “supportive” or “not supportive”). What does all that mean? (Hence my “bull” vs “bear” battle photo up top) More to come on this…
Enjoying the snapshot of the energy trade floor meteorologist position so far? Any questions so far? Please ask below. In Part 2 of this post, I will go into how the Energy trade floor meteorologist communicates this information to the traders and what other products/tasks they need to do in this challenging and fast paced work environment. I’ve only discussed the first hour and a half or so of the job…there’s a lot more to do! Stay tuned! (Photo credit: cafepress)