Seasonality
Seasonality is a tendency for prices to behave in a certain way at certain times of year, such as harvest effects in agricultural commodities.
Some markets behave differently at certain times of year. Heating demand, harvests and holidays can shift supply and demand in fairly regular ways. Seasonal patterns are tendencies, not guarantees, so they work best as one input among many.
- Category
- Trading Strategies
- Reading time
- 3 min
- Also called
- Seasonal patterns, Seasonal trading, Seasonal tendencies
- Updated
Seasonality in plain words
Natural gas prices follow regular patterns that track the changing seasons.1
In winter, heating in homes and businesses pushes gas demand sharply higher.1
Gas held in storage helps soften the price impact of cold snaps.2
How to use seasonality
Pick the market
Choose a market with a clear seasonal driver.
Learn the driver
Track storage: it usually peaks around late October to mid-November and bottoms out at the end of winter.1
Check the current year
Weather and stocks change each year.
Combine with price
Confirm with Trend and Support and Resistance.
Size modestly
Use normal Position Sizing; patterns can fail.
Test it
Use Backtesting while remembering past patterns may not repeat.
Worked examples
Example 1 — Winter demand
Pattern heldA hypothetical cold winter lifts natural gas demand and prices.
| Season | Winter |
| Result | +2R |
Cold weather drove heating demand — and prices — higher.1
Example 2 — Mild winter
Pattern failedA hypothetical mild winter and full storage keep prices low.
| Storage | High |
| Result | −1R |
Full storage absorbed the cold snap, so the expected price jump never came.2
Example 3 — Summer heat
Summer effectA hypothetical heatwave lifts gas use for power in summer.
| Season | Summer |
| Demand | Higher |
Hot summers boost demand too, as air conditioning use rises.2
Seasonal tendency vs current trend
| Aspect | Seasonal tendency | Current trend |
|---|---|---|
| Based on | Past years | Recent prices |
| Reliability | Varies year to year | Can change anytime |
| Best use | Background bias | Timing entries |
| Main risk | Unusual years | Reversals |
Where seasonality is used
Energy markets
Heating and cooling demand cycles.
Farm commodities
Harvest and planting periods.
Retail shares
Holiday-season Earnings.
Trade timing
Adding a bias to a Trading Plan.
Advantages and disadvantages
Advantages
- Based on real supply and demand drivers.
- Gives a useful background bias.
- Easy to check against history.
- Works alongside other analysis.
Disadvantages
- Patterns can fail in unusual years.
- Widely known patterns may be priced in.
- Small samples can mislead.
- Weather is unpredictable.
Going deeper
Read as far as you need. Each level builds on the one before it.
What it is
Beginner
Seasonal price patterns in gas mostly follow the weather.1
Storage cycle
Intermediate
Storage builds through summer and autumn, peaks before winter, and is drawn down to its lowest by winter's end.1
Two seasons
Advanced
Summer matters as well, because heat waves raise power demand for air conditioning.2
Common mistakes
Treating patterns as certain
Every year is different.
Ignoring current data
Storage and weather change the picture.
Over-fitting history
Few years can mislead.
Oversizing
Seasonal trades can fail.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Seasonality is a time-of-year tendency.
- Weather and harvests are common drivers.
- Patterns are not guarantees.
- Check current data each year.
- Use seasonality as one input.
Frequently asked questions
Do seasonal patterns always repeat?
Which markets are most seasonal?
Can I trade on seasonality alone?
Further learning
- Backtesting
Testing seasonal ideas.
- Trend
Confirming with price.
- Trading Plan
Adding a seasonal bias.
- Volatility
How seasons change swings.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- CME Group. Introduction to Natural Gas Seasonality (opens in a new tab) Checked .
- U.S. Energy Information Administration. Factors affecting natural gas prices (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.