UPDATE: The Fly, of course, is correct, and Bertha appears to have decided to head out to sea.  The storm pulled itself together, strengthened to 60mph+, and, as discussed below, is therfore more likely to feel an approaching trough and recurve well east of the United States.  Unless something changes rather dramatically in the forecast track, I see no Hurricane play on this one. Sorry folks. However,  it is only July and the real season has not even begun yet, and Bertha’s formation so far east so early bodes ill for those hoping for an inacitve season.

Tropical Storm Bertha formed in the far eastern Atlantic Thursday afternoon, just south of the Cape Verde Islands, off Africa. In fact, by forming at such an extreme eastern longitude, Bertha set a record as the earliest tropical storm to form east of 25W.

So-called “Cape Verde” storms are frequent during the peak of the season in August and September and, due to their several thousand mile trek across the warm waters of the Tropical Atlantic, develop into the most intense hurricanes. Hurricanes Gilbert, Andrew, Ivan, and Katrina all had their origins south of the Cape Verdes. However, the reason none of these storms developed before mid-August is due to the normally unfavorable conditions during June and July that prevent formation so far east. (During June and July, development is usually restricted to the Gulf, the Caribbean, and the US east coast) Sea-surface temperatures are normally relatively chilly in that part of the Atlantic, due to cold currents and the presence of dust blowing off the western Sahara desert. This dust scatters incoming solar radiation decreasing the amount of heat available to warm the ocean surface. Secondly, wind shear, the changing of wind direction with height (a negative influence on storm development) is normally high in this part of the Atlantic during the early season. However, this year, SSTs are above average in that part of the ocean, and wind shear has slackened in recent weeks.

As a result, Bertha has the potential to become a hurricane and threaten the United States down the road. At the moment, it is struggling as a (rather generous) 50 mph tropical storm. Despite warmer-than-average surface temperatures, Bertha is still in an area with temperatures only marginally above the generally accepted threshold of 24C or 75F. Within 24 hours, Bertha is likely to encounter warmer water of 27 or 28C and will have an opportunity to strengthen. However, by late Monday, wind shear, which is currently favorable for strengthening at less than 15 knots, is expected to increase to a rather unfavorable 20 knots.  The National Hurricane Center brings Bertha up to a 75 mph hurricane by Tuesday, with steady strength after that, which seems reasonable given the expected atmospheric conditions, assuming that Bertha can survive is present unfavorable environment. Some of the computer models make it a bit stronger, in the 80-85 mph range.

 The track has been more problematic. Until late yesterday evening, pretty much all of the computer models predicted that Bertha would encounter a trough (i.e. cold front, which acts like a wall to a tropical system) and recurve out to sea east of Bermuda and pose no threat to land, as do roughly 70% of Cape Verde storms. However, since then, the models, as seen below, have diverged into two camps (the UKMET and GFS versus the GFDL, BAMM, and LBAR, see below), introducing the possibility that the trough that was expected to recurve Bertha, will miss it to the north, allowing the storm to continue westward.  However, any potential threat to the US would not happen for over a week as Bertha has has over 2000 miles to travel to get near the US.

 Only time will tell if this is a temporary shift by the models, or a true change to the track. Bertha’s strength will be the main factor in its future track. The whole thing is rather counter-intuitive. Strong storms are more likely to “feel” a trough and be recurved, while weaker storms are more shallow and can often sneak past it. Thus, if Bertha gets its act together before the trough passes, it will likely curve out to sea and miss the U.S, but if it remains in its relatively weak current state, it might continue westward towards the US.

Even if Bertha does escape the trough and impacts the US, it is unlikely to do so in the Gulf of Mexico where all of the oil/natural gas infrastructure is. Any US impact would likely be in the Carolinas or New England. This presents a somewhat troubled picture for those looking for a hurricane play. On the one hand, this is bullish for oil/natty in the very short term and also the long term. News agencies haven’t picked up on the storm yet, and probably won’t for a few more days. Once they do, the mere headline “Hurricane in Atlantic!” is likely to bring out the speculators and ratchet up prices somewhat in the near term. In addition, this is bullish long term. The fact that a storm has developed this far east so early indicates that we will likely have a whole boatload of Cape Verde storms this year. Odds being what they are, there is an increased chance of one of these storms barreling into the Gulf of Mexico and wrecking hell.

However, the fact that this storm is unlikely to ever get into the Gulf and will not become stronger than a Category 1 storm, will go over the heads of some idiots, ultimately causing pain for Oil & Natty longs. I think the case of Hurricane Dean below from last summer best illustrates the market’s reaction to a miss on the Gulf’s Oil and NG infrastructure. Apologies for the crap chart.

             With commodities so high right now, I believe it is a bit foolhardy to start loading up due to just one storm in the middle of nowhere. In fact, should NG take off next week due to the presence Bertha, I might look to get short select NG stocks. I see a very small chance of this storm getting into the gulf, and can only hope that there are some suckers out there who disagree and jack up prices. While this will not be as extreme a situation as Dean, a pullback in NG is possible upon Bertha missing the gulf, especially since I believe that commodities are just looking for some news to temporarily give back some of this year’s moves.  Despite my being bullish longterm on energy plays, I think Bertha might provide a good short-term short opportunity, should we see any sort of overreaction next week. 

Disclaimer: Meteorology is not an exact science and is subject to change.