The changing of the seasons

Although they should never be relied upon completely to determine where commodity prices will go next, seasonal price charts can give some insight into the drivers of commodity prices as the seasons change.

The oil market is a case in point where WTI crude prices used to hit a low in the first quarter and then peak around the third quarter as demand reached a peak during the summer (the so called ‘driving season’ in the US and hot weather in the Middle East requiring air conditioning increasing demand for oil) while supply problems (such as the hurricane season in the US Gulf) came to a head.

Unlock commodity market insight now and subscribe to our email updates, follow on Facebook or

The chart below shows how the seasonal price trend for WTI has changed over the past five years as the new technology of fracking and a corresponding increase of U.S. onshore production have drastically shifting the shorter-term seasonal pattern in oil.

To some extent this change may reflect the reduction in hurricane activity in the US Gulf seen over the last few years. But even accounting for this with a greater proportion of US crude output now onshore the risk to production, even in a particularly active hurricane season is likely to be much less.

Related article: Storm season posing little threat to energy markets

Given that energy accounts for up to 50% of the production cost for many commodities this change in the seasonal oil price pattern could have implications for other commodities too.  The historical correlation between cotton and crude is the highest across all commodities at 0.45:1.

Related article: Which commodities are most affected by lower oil prices?

2015-09-11_0544

Related article: Seasonal price trends in steel and base metals

(Visited 32 times, 5 visits today)
Buy the book Commodities: 50 Things You Really Need To Know from Amazon (US and UK), iBooks, Barnes and Noble, Google and Kobo.If you like the book please leave a review on Amazon. Reviews really do make a difference. Thanks.

Published by

Peter Sainsbury

Materials Risk provides commodity market insights across your supply chain by highlighting emerging risks and opportunities and providing advice on commodity buying and managing risk. All views expressed on this website are those of Materials Risk only. See our About page and terms and conditions for more details. Materials Risk was founded by Peter Sainsbury who you can follow on Google+ and Quora