Seasonal Oil Patch Trends
Oil has traded over the past few decades with a distinct seasonal pattern. There is an annual low in December or January and a price peak in August or September. But along the path to the top, oil prices often consolidates during April, May and June. The seasonal demand for heating oil and unleaded gas influences the seasonal demand for crude oil as production is switched between the two to make the best use of refining capacity. To elaborate, the strongest for gasoline is in the summer driving season which typically starts around Memorial Day and ends by Labor Day. Oil refinirie will seek to optimize their mix in order to maximize the production of unleaded gasoline. This requires a re-tooling effort in the March and April timeframe. As a result of the planned shutdown, oil inventories tend to fall, thereby creating a demand/supply imbalance and oil prices often rally. The world of the oil patch indeed operates along a seasonal trend. This does not mean that other forces that can potentially influence oil prices cannot upend this seasonality aspect of oil price movements. But it serves us well to take into account all of the key information before purchasing or selling oil stock.
