Energy News: Natural Gas’s Spring Shoulder Decline an Opportunity to Hedge the Cost of Natural Gas and Electricity? – Part 2
Energy News Update: April 14, 2025 Natural Gas’s Spring Shoulder Decline an Opportunity to Hedge the Cost of Natural Gas
Energy News Update: April 14, 2025 Natural Gas’s Spring Shoulder Decline an Opportunity to Hedge the Cost of Natural Gas
Energy News Update: April 14, 2025
In our March 24th Energy Update, we explained that Spring Shoulder Periods occur between the winter heating and summer cooling periods, and the Fall Shoulder Period occurs between the summer cooling and winter heating periods when demand for Natural Gas and Electricity is very low.
Therefore, with demand declining as we entered this year’s Spring Shoulder Period on Mar 24th, it was not surprising that Natural Gas declined from its highest price in more than 2 years:
As we explained in our last report, although Natural Gas may decline further during this year’s Spring Shoulder Period, with supplies ending the Winter heating season 10% below the 5-year average, this year’s decline would likely be shallow, and the risk of higher prices remained very high.
Why is the risk of higher prices very high this year?
As we explained in our Dec 2nd Energy Update that although the Trump administration’s policies promoting increased production will mitigate the impact of surging electricity demand domestically and exports internationally, demand is expected to outpace supplies, which supports the observation when prices were as low as they were in 2024, it always preceded Cyclical Bull markets that trended higher 2 to 4 years, and it didn’t matter who was president at the time!
Therefore, past Cyclical Bull Markets indicate the present market is not near its conclusion, and there will likely be at least one more painful rally in the future. The trigger could be a warmer-than-normal summer or a geopolitical event in Europe or the Middle East.
We cannot say with 100% certainty what the next trigger will be. Our role as energy advisors is to identify potential risk factors to help you make an informed decision concerning the timing of your next hedge. A classic pattern during Cyclical Bull Markets is a series of higher highs and lows. If this pattern continues to hold, we may be near its conclusion before the next move higher,
Based on the long and short-term patterns discussed in today’s report, we believe the upside risk is far greater than the downside reward potential; therefore, we recommend anyone with agreements expiring within the next 18 months take advantage of the recent short-term decline 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 contact one of our energy analysts to help develop a hedging strategy tailored to your specific situation.
Ray Franklin
Energy Professionals
Senior Commodity Analyst
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