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Quantitative Finance · Glossary

What is Injection season, summer–winter spread?

Also known as: injection season · summer--winter spread

Definition 4.5 Markets III: Commodities, Energy and Crypto · Chapter 4 — Natural Gas and LNG

The injection season is the part of the year in which storage is filled, roughly April to October in the northern hemisphere; gas is withdrawn in the winter months that follow. The summer–winter spread is the price of gas for the next winter minus the price for the preceding summer; it pays for storing gas through the season.

The seasonal shape of a gas forward curve, schematic: summer months are cheap, winter months dear. A storage owner buys summer and sells winter; the spread, net of injection and withdrawal costs, is its intrinsic value. Stylised, no data.
Figure 4.1. The seasonal shape of a gas forward curve, schematic: summer months are cheap, winter months dear. A storage owner buys summer and sells winter; the spread, net of injection and withdrawal costs, is its intrinsic value. Stylised, no data.
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