Seasonality

Seasonality exists because many real-world activities are driven by weather, harvests, holidays, or fiscal calendars that repeat annually. Natural gas demand, for example, historically rises in winter in the Northern Hemisphere as households heat their homes, and can spike again in summer where air conditioning is prevalent. Agricultural commodities follow planting and harvest rhythms — grain prices often reflect "new crop" versus "old crop" dynamics depending on where the market sits relative to the harvest. These patterns show up in commodity price data and in economic indicators alike.

When economists say a data release has been "seasonally adjusted," they mean the raw number has been mathematically stripped of its typical calendar pattern so that the underlying trend is easier to see. For instance, retail sales almost always rise in December because of holiday shopping; a seasonally adjusted figure removes that expected jump so analysts can judge whether spending was genuinely stronger than normal.

A common confusion is treating seasonal patterns as reliable predictions. Seasonality describes historical averages, not guarantees. A drought, a geopolitical disruption, or an unusually warm winter can override the typical pattern entirely — this is precisely where a supply shock can overwhelm seasonal expectations. Traders typically use seasonal charts — which overlay the current year's price path against the average of past years — as a reference, not a forecast. The volatility guide explains why deviations from seasonal norms can themselves be informative signals.