It was recently reported in an issue of Today in Energy that natural gas prices are reflecting less seasonal-related trends from year to year. This reduction in seasonality in the natural gas markets, according to the US Energy Information Administration (EIA), is attributed to several factors.
Seasonality, which is defined by the NIST/SEMATECH e-Handbook of Statistical Methods simply as periodic fluctuations in a time series, is often seen in energy market particularly regarding natural gas prices. The handbook states that “Seasonality is quite common in economic time series. [However, it] is less common in engineering and scientific data.” The seasonality of natural gas prices refers to the cyclical nature of pricing between the high winter-heating demand season and the season with lower demand.
According to data shown by the EIA, the price differential between the natural gas price for delivery in February and its price for delivery in November “has decreased from an average of 65 cents per million British thermal units (MMBtu) in October 2010 trading to an average of 24 cents in October 2013.” This decrease shows that the market expects prices to vary less between a peak winter month relative to prices during the shoulder season (autumn).