Seasonal trends give traders an extra tool that can be used to pinpoint the high reward low risk trades.

There simple to understand and easy to use and can increase profit potential dramatically.Last week one of the best seasonal tendencies returned over 14%!

If you have never looked at them you need to - They are great profit tool for any trader's novice or pro.

The seasonal tendancey for the major energy markets are outlined below.

Heating Oil

Heating oil, known also as No. 2 fuel oil, accounts for about 25% of a barrel of crude making it the second largest "cut" after unleaded gasoline.

The demand for heating oil is obviously strongest in winter.

Therefore stocks tend to be highest in the October and November in anticipation of a cold snap and decline to a minimum in the February - March time frame in anticipation of warmer weather. June and July then become the fill months in anticipation of the colder weather ahead.

Unleaded Gas

Unleaded gasoline is the largest petroleum product refined in the United States and the world. Gasoline is the largest volume refined product used in the USA and accounts for almost half of national oil consumption.

It is a highly diverse market, with hundreds of wholesale distributors and thousands of retail outlets, which contributes to price considerable volatility.

Three-quarters of the total usage of gasoline is by individuals, with demand ebbing and flowing with the driving habits.

The seasonal in unleaded gasoline is the opposite of heating oil, where peak demand is in the summer driving months. Unleaded gasoline stocks peak in April May in anticipation of the summer driving season and are lowest in September October.

Crude Oil

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. Crude oil seasonal tendency is for prices to move higher into the fall, as refineries switch production of gasoline to production of heating oil in mid to late summer.

This often increases demand for crude and higher prices are the result. Natural Gas

In the United States, natural gas is used mainly for heating in the Northern states during the cold winter months and is used as a fuel to produce electricity for air conditioners during the summer in the South.

Therefore seasonal demand is highest during these periods and traders need to look at storage coming into these periods of peak demand to anticipate where prices may go and if there will be a shortage or not.

How to use seasonal tendencies to trade

Always keep this fact in mind:

Price precedes consumption

Supplies must be stockpiled in ADVANCE to meet seasonal demand. The up shoot of this is:

Price tends to rally in anticipation of consumption and you need to look forward to see where prices may go. Demand on the wholesale level begins to increase in advance of peak retail usage.

A great seasonal making huge gains

Anyone reading our articles on seasonal tendencies will know how bullish we are on natural gas and as we enter the period of peak demand prices have soared by 14% in a week.

This seasonal has allowed many savvy traders to have entered market positions in ADVANCE of this move and now they are sitting on some great profits with maybe a lot more to come.

Look at seasonals for yourself and use them as an extra filter and you will find they add a new profitable dimension to your trading.