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Numerical Weather Prediction

Trading Term

Numerical weather prediction is the practice of forecasting the atmosphere by solving the governing physical equations forward in time from an estimate of the current state. Because the computations are expensive, global models are typically run only a few times per day, which means new observations can accumulate faster than the models can incorporate them. That gap between model run frequency and the arrival of information is one structural reason a continuously updating market price can differ from, and at short lead times potentially improve on, the most recent model output.

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