Oil Price Report: Price Spike for Natural Gas Imminent?

The U.S. natural gas market is cyclical. Demand spikes in the winter as people and businesses turn up the heat, but consumption dips in spring and fall because of mild temperatures. That means that between November and March, gas inventories are drawn down, only to be replenished between April and October. The peaks and valleys of this market fluctuate from year to year, but generally they follow a predictable pattern.

However, at the same time, U.S. natural gas demand is rising on a structural basis, as coal plants shut down and more gas-fired generation comes online. Plus, gas exports in the form of LNG are steadily on the rise. That means that while demand continues to follow a cyclical pattern, both the peaks and the valleys of this pattern are rising steadily over time.

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