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
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