Energy news report: March 24th, 2025 Natural Gas Decline into the Spring Shoulder Period an Opportunity to Hedge the Cost
Energy news report: March 24th, 2025
In our Mar 11th Energy Update we pointed out that since 2000, when Natural Gas was as low as it was in 2024, it always preceded Cyclical Bull Markets in which the average price was higher for at least 2 to 4 years, and it didn’t matter who was president:
Cyclical Natural Gas Bull Markets trend higher during their cycle, which often experience short-term seasonal declines during their Spring and Fall Shoulder periods.
The Spring Shoulder Period occurs between the winter heating and summer cooling periods, and the Fall Shoulder Period occurs between the summer cooling and winter heating periods when the demand for Natural Gas and Electricity is very low.
Therefore, with demand declining over the last week as we entered this year’s Spring Shoulder Period it is not surprising that Natural Gas declined from its highest price in more than 2 years:
Although Natural Gas may decline further during this year’s Spring Should Period with supplies ending the Winter heating season 10% below the 5-year average, this year’s decline will likely be shallow, and the risk of higher prices remains very high.
The following is an example of the risk we may face this summer if we experience the warmer-than-normal summer many meteorologists forecast.
During the last Cyclical Bull Market beginning in 2020 when Natural Gas supplies finished the winter heating season below the 5-year average in 2022, the Spring Shoulder was very shallow, and prices more than doubled due to a warmer-than-normal summer in 2022. The rally was interrupted by an explosion at the Freeport LNG export facility slowing LNG exports before again rallying to a 14-Year High:
We cannot say with 100% certainty that this year’s summer temperatures will be above normal, our role as energy advisors is to point out potential risk factors associated with a warmer-than-normal summer to help you make an informed decision concerning the timing of your next hedge.
This is important because we know with a high degree of certainty that the present Cyclical Bull Market is not near its conclusion and there will likely be at least one more painful rally similar to what was experienced in the summer of 2022.
We based this on the fact in our reports earlier this year we pointed out demand is expected to outpace supplies for an extended period, which will support higher prices similar to what has happened since 2000 when prices were as low as 2024 the average price was always higher long-term.
For those desiring further analysis, our 2025 Winter Update includes a detailed explanation of why supply deficits are expected over the next few years, why the risk of higher prices will continue to increase, and why we recommend anyone with agreements expiring within the next 18 months take advantage of short-term declines to reserve Natural Gas and Electricity to be available when their present agreements expire.
Not every client’s risk tolerance and hedging strategy are the same, but hopefully, today’s report helps you understand your risk/reward opportunities. We invite you to call one of our energy analysts to help you plan a hedging strategy appropriate for your situation.
Ray Franklin
Energy Professionals
Senior Commodity Analyst
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