Weather and Natural Disasters

Why El Niño could mean more pain for energy sector

El Nino & your portfolio
El Nino & your portfolio

A possible consumer boost this winter could bring more pain to an already battered energy sector.

El Niño weather conditions, which cause unusually warm ocean temperatures in the equatorial Pacific, are expected to last well into next year. While severe weather created by the phenomenon can cause destruction, it may mean a warmer winter—and less energy consumption—for many consumers in northern U.S. states.

"If El Niño holds according to plan it would be warmer and drier than normal this winter in the Northeast," said Dan Leonard, senior meteorologist at Weather Services International, in a CNBC "Power Lunch" interview Tuesday.

That possible dip in demand could pressure energy prices, particularly for natural gas, he said. The already tumbling commodity's price has fallen nearly 30 percent in the last year, hitting the sector's bottom lines.

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He noted, though, that it may be too early to determine whether this winter will be warmer than usual.

El Niño's effects go well beyond those northern states. It can lead to increased rainfall and flooding in the southern U.S. and drought in the West Pacific, which can drive fluctuations in a variety of agricultural commodities.

Still, in California—which is mired in the fourth year of a drought—an increased chance of rain may be a "good thing," Leonard added.

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