Making Money from the Weather

Carl at Accuweather wants to know of people who are using weather forecasts to trip alarms about upcoming severe weather, and then that are trading the news. I know I’ve heard from people claiming to do that, so let him know:

… it seems to me that this year the price of crude has bounced around anytime a weather forecast is issued. Is it just me? I’m hoping that someone here doesn’t get giddy with the power and start predicting sunny and warm just to drive prices down.

The Street has a good article on this, and actually quotes AccuWeather:

A winter storm on Tuesday will bring heavy rain, strong winds and mountain snow along the East Coast, said AccuWeather, a State College, Pa.-based weather forecaster. Temperatures are expected to drop to the 30s through Thanksgiving.

Someone should do (or probably has) a comprehensive study of which forecasts drive the market and then set up automated alarms for when those forecasts are issued, so they would know when to buy and sell. That doesn’t sound hard. (Remember me when you do this and get rich. You can send me a case of Pepsi.)


  1. Energy derivatives (e.g. IPE and NYMEX-traded futures and options on futures for Natural Gas and Crude Oil as was swaps) are highly sensitive to the weather. Carl’s insight, while on-target, is hardly new. Energy desk have long been watching the weather channel.

  2. Right, and I think, although I may be wrong, that we was thinking of something more programmatic. Or at least that’s what I was thinking.

  3. As the aforementioned Carl, I’ll briefly weigh in and say that yes, I was thinking programmatically. As opposed to someone having to watch a channel, just set up a service that proactively alerts you to specific changes in the forecast (near and long term) that tend to drive the markets. We’re working on some similar things in-house, and hope to have something in beta soon.