Predicting the weather is even more of a losing game than making financial predictions. It has been 20 years since Michael Fish assured us that a hurricane was not on the way before the southern half of the UK was battered by severe and unyielding winds. However, it now looks like errors in weather forecasting across the Atlantic may just have saved our bacon…

I have been writing about the Atlantic storm season for many months following predictions of an unusually active season from US commentators such as Joe Bastardi. I was rightly concerned about its impact on the oil price.

Well, I now think that Joe should change his first name to “Useless” but maintain his unusual surname.

He and other US hurricane “experts” have been predicting a dire 2007 storm season for months. There were even comparisons with the situation in 2005 when Katrina caused a massive amount of damage to the oil-producing areas of the Gulf of Mexico.

Initially, the thing that set all the alarm bells ringing was the fact that subtropical storm Amanda formed almost a month before the official start of the hurricane season. This was at exactly the same point at the start of May as tropical storm Adrian formed in 2005 – the year New Orleans was all-but destroyed.

But all this hand-wringing has been a waste of time. Hardly anything happened. It has been the proverbial damp squib…

Forecasters predicted that 17 named storms will form in the Atlantic this year, with nine of those becoming hurricanes. Five of those hurricanes were expected to be major hurricanes (Categories 3, 4 and 5 on the Saffir-Simpson scale).

In fact… just four of the 14 named storms so far have blossomed into hurricanes and only one, Humberto, struck the US…

Not blowing in the wind

But it appears that all the predictions were wrong…

Over the weekend, Ryan N Maue of Florida State University published an analysis on the website of The Centre for Ocean-Atmospheric Prediction Studies. It showed that this year’s season was likely to be a historically inactive period, unless a ramp up of activity is seen.

“Unless a dramatic and historical flurry of activity occurs…. 2007 will rank as a historically inactive tropical cyclone year for the Northern Hemisphere as a whole. During the past 30 years, only 1977, 1981, and 1983 have had less activity to date.”

Only 1977 experienced less tropical cyclone activity than the 2007 season so far.

While this proves that weather forecasting is an inexact art, it was right to pay attention to what these people were saying.

During the 2005 season there were 27 named storms including 15 hurricanes, seven of which were classified as Category 3 or higher. The paths of five of these major hurricanes passed through the Gulf of Mexico significantly disrupting oil and natural gas production.

The US Department of Energy calculated that oil production for the whole year was reduced by 30% and gas production by 21% because of the storm damage.

Just imagine if the Atlantic storm season had met expectations.

WTI futures have already moved towards $94 without any of this supply disruption. It looks like the whole world got off lightly. A major storm would significantly increase the oil price and prompt an inflation scare that would see a major global sell off. It would probably have been enough to tip the US into a major recession... and that would have been really bad to the entire world.

So, let’s hope the next few weeks remain just as quiet… for the global economy’s sake… P.S. If you enjoyed this article then sign up for Smart Commodities UK. It’s dedicated to searching out the investment trends that could provide our biggest profit opportunities for the next decade…

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