Now that the NBA season is restored, blocking out is again a topic of discussion among announcers, coaches and fans. For a natural gas industry seeking a surge in winter demand to strengthen prices, however, the weather event known as blocking, which typically issues in a cold winter, is off the table.

In an early November presentation on natural gas supply and demand in Denver, Jennifer Cogburn, head of fundamentals and research for Societe Generale Energy, the physical subsidiary of the bank’s corporate and investment banking arm, said the biggest short-term driver of 2012 natural gas prices would be one event—blocking. (At press time, Soc Gen announced it was closing its physical gas and power trading business.)

At the time, cold-winter forecasts rested on this one key variable, and Cogburn called for downside price risk if it didn’t materialize. It didn’t, and prices have contracted.

Blocking occurs when a ridge of warm air forms over Greenland and northeast Canada, blocking the flow of weather from west to east, and dumping cold air from Canada into the U.S. In 2010-2011, blocking manufactured the memorably frigid winter. Without the pattern, the current La Niña results in a fast jet stream, creating cold conditions in western Canada but above-normal temperatures east of the Rockies.

Until late November, weather forecasters had been united in their expectation of blocking for this winter. “The agreement was remarkable going in,” says Gary Gray, senior meteorologist for Societe Generale. “It’s not a big shock that all the forecasts failed. The reason it’s shocking to some people is that everyone had agreed.”

With the Pacific flow warming up much of the U.S. at press time, Gray expected a warmer-than-normal December. “In fact, we’re seeing even more severe warmth than from a normal La Nina,” says Gray.

Could blocking still arise in time to crank down thermostats in late January and February? “It’s possible, but right now there’s no sign of it,” says Gray. “Features favoring blocking, such as the ongoing Arctic ice melt and warmer Atlantic Ocean temperatures, haven’t gone away, but it just hasn’t materialized.”

But regardless of whether the latter part of the winter turns chilly, lower gas demand due to a lost early season has already affected 2012 gas pricing.

“The important thing to note is that without blocking, La Nina is the dominant feature, and that will continue the warm pattern for the rest of winter,” Gray says.

Cogburn notes that the “humongous shift” in weather forecasts has heightened fears about the gas-storage situation. “In the fall, every region in the U.S. was in a supply-growth trend, and in the last month or so, they’ve flattened slightly, which would be a little less bearish. But there is still an oversupply situation.” The supply picture alone puts pressure on 2012 prices; the weather just adds to the problem.

Cogburn expects supply growth to continue until a point in mid-2012 when gas prices are low enough to incentivize producers to cut back drilling. “Right now, there’s nowhere to put the supply that is coming.”

The fourth-quarter 2011 gas-price forecast from Laurent Key, vice president of North American natural gas research for Soc Gen’s corporate and investment banking arm, was very bearish. It called for an average of $2.90 per million Btu for 2012. This winter’s prices (December through February) are expected to average $3.45 per MMBtu, with the shoulder months averaging $2.70. Even with a 6% colder-than-normal winter priced into the model, inventory levels should bottom out at 1.88 trillion cubic feet (Tcf), according to Key.

“As funds extend their bear positions, the U.S. natural gas market will enter the last phase of price correction, with a supply overhang that may last two to three years. No matter how cold this winter is, projected March inventory levels above 1.85 Tcf will keep 2012 prices below $3 long enough to eventually lead to significant supply cutbacks,” he says.

“According to the models, this winter should be warmer than normal…a 5% warmer-than-normal winter would see end-of-March inventories at a staggering 2.31 Tcf level, 600 billion cubic feet above the record high from last March.”

Like basketball players facing a shortened season, producers can hope for better years. Key’s long-term price forecast for 2016 and 2017 is $5.50 and $6, respectively, reflecting a bullish outlook on European gas demand and U.S. liquefied natural gas exports. And he notes the under-investment in dry-gas production expected for the next three years could lead to a bullish structural shift by 2015, with prices approaching $5.