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Natural Gas is a
quirky member of the Petroleum group. It’s pricing shares a lot with
Unleaded, as it is purchased on the consumer level like gasoline. However,
it’s peak demand periods share more with Heating Oil, and Natural Gas is
used for residentially for Heating and Cooling.
* Past performance is not
necessarily indicative of future results. See disclaimer below for
further details.
Prices tend to tank
after the original onset of either the Heating Season (October to February)
or the Cooling Season (June through August). However, towards the tail end
of these seasons, last minute purchases to meet demand tend to push prices
higher.
Traders should note
the strength in March at the end of the Heating Season, as well as strength
in September at the end of the Air Conditioning season. But, just as
importantly, traders should note that the trends established near the end of
the “dual demand” seasons tend to be reversed – especially with September
strength reversed in October in 7 of the last 10 years which saw higher
September prices.
Moderate weather
during the April through June period tends to cause weakness in demand for
Natural Gas, and hence prices suffer. However, as prices warm and air
conditioners are run, prices increase as demand increases.
The key point in
understanding Natural Gas pricing is to understand its usage pattern, both
in heating and cooling, as well as in electricity production.
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