Texas Arctic Blast Is Impacting the Stock Market

People are preparing for an Arctic blast set to chill the U.S. starting this weekend. The foreboding forecast seems to have slowed the stock market as well, with prices trending downward, particularly in the natural gas industry.

One forecast model shows the blast arriving from the west this week, blanketing the Plains states with temperatures as much as 16 degrees below average. By Sunday, the cold air will continue its path and descend as far south as into Texas, sparking concern about the resiliency of the Texas power grid after it suffered a massive failure in February of 2021 after being impacted by three severe winter storms. The incoming cold has stock traders hesitant, but trends could change with the forecasts.

Another blast will hit the Lone Star State in the days leading up to Christmas, with temperatures as much as 30 degrees below average, according to a forecast model shared by meteorologist Brad Panovich on Twitter.

That means Texas residents could face nights with single-digit temperatures, and those in northern states like Montana and North Dakota and South Dakota could face potentially record-breaking lows as much as 60 degrees below average, according to AccuWeather Chief Meteorologist Jonathan Porter.

An Arctic blast set to chill the U.S. starting this weekend seems to have slowed the stock market as well, with prices trending downward, particularly in the natural gas industry.
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“There’s going to be a notable surge of Arctic air into Texas,” Porter told Newsweek, adding that the Arctic blast is coming from an above-average snowfall and persistent cold air in Alaska and Canada. The cold air is migrating to the contiguous 48 states.

The stock market reacted to the forecast by trending lower on Wednesday, particularly those in the natural gas sector. According to an article by global financial news site FX Empire, NatGasWeather, a site that publishes daily weather forecasts with a focus on weather events that could heighten heating demand, said the plunge in temperatures would lead to a demand for natural gas, which is already experiencing high demand. However, some newer forecasts show the temperatures not as low as previously anticipated.

Some traders believe weather has an impact on the market, even on stocks not in the natural gas industry. Others believe the weather plays no part in the market. Investopedia published an article in 2021 that reports on a theory suggesting how severe weather can interrupt a business’ process, as well as inhibit the supply chain or slow consumer movement. The sluggish response to weather could be mirrored in the market.

One senior analyst in the FX Empire article said the weather forecast could lead to a natural gas storage withdrawal of as much as 200 billion cubic feet in the week leading up to Christmas. That high a number hasn’t been seen since 2017.

“This would also be something for the market to strongly consider, particularly if weather forecasts fail to give up the delivery of Arctic air before year end,” senior analyst Zane Curry said.

The forecast shared by Panovich anticipates the Arctic blast finishing its onslaught on the U.S. a few days after Christmas.

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