Natural gas seasonality

27 December 2023 111
Natural gas seasonality

The winter months represent a traditional seasonal decline in natural gas prices. Gas reservoirs for the coming season are usually filled from mid-spring to mid-autumn. During this period, operators actively buy gas, supporting the upward trend in gas prices. By the end of fall in the Northern Hemisphere, storage facilities are full, there is no need to purchase large volumes of gas and the prices begin to drop. The sharpest decline is recorded at the end of November and in December. In January-February, the downward dynamics became less pronounced with corrective upward movements. It should be noted that this year's downward cycle started in early November, which is almost a month earlier than seasonally expected. Nevertheless, the main direction of the winter trend remains the same, i.e. downward movement.


In terms of the current supply-demand balance, the U.S. Energy Information Administration has revised its November gas price forecast downward. This revision reflects both a warmer than average beginning of the winter, which resulted in lower demand for heating in the residential and commercial sectors, and high levels of natural gas production. These two factors led to an increase in gas reserves and, consequently, put pressure on the exchange market.

Considering the technical picture, the 2,270 level may serve as a target for selling NG below the current price.


The overall recommendation is to sell NG.

Profit of selling NG should be taken at the level of $2,270 per ounce. A Stop-loss could be set at the level of $2,700 per ounce.

 

This content is for informational purposes only and is not intended to be investing advice.

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