Jake Swart here, thanks for reading my articles! As a Junior Broker at Daniels Trading, I’ve been feverishly learning all there is to know about the futures market, especially the energy markets. Follow the links below to read my previous articles, but let’s talk seasonality.
A key factor in determining the price of energy is the time of year. As you would probably assume, gasoline and oil are in higher demand at certain times of year than others. The demand for gas is highest during the cold winter months because it is needed to provide heat to commercial and residential buildings and houses. For that reason, the peak season for withdrawing natural gas from the storage facilities is during the winter months (between November and March).
On the other side of the spectrum, the peak injection season for the gas is during the summer season (between April and November). While this is the time of year where gas is heavily injected into the storage facilities, there is still a need for gas during this time of year. As previously mentioned, the peak for demand of gas is during the winter months for heating, but there is also a peak, albeit smaller, during the hot summer months to power the electricity that is used for the air conditioning.
As you may have guessed, demand is at its lowest during the spring and fall months because the weather is neither cold enough to demand excessive heating or warm enough to demand excessive air conditioning. The EIA does a good job of giving a detailed explanation of the seasonality of storage and if you’re looking for that it, can be found right here http://www.eia.gov/todayinenergy/detail.cfm?id=22892.
My next post, I’ll be reviewing the montly Short Term Energy Outlook report.
- Exploring Energies and the EIA: Introducing Jake Swart
- Exploring Energies and the EIA: What is the EIA?
- Exploring Energies and the EIA: Weekly Reports
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.