Ice Cream and Nat Gas Storage

May 02, 2022

With natural gas becoming a global commodity, some traditional fundamentals have lost their luster. The argument can be made that the relationship between supply and price remains tight. Going back to the start of 2020, the correlation between the Henry Hub benchmark and natural gas inventory versus the five-year average as reported by EIA is -.80. Generally speaking, a correlation greater than positive or negative .75 is considered strong and indicative of a linear relationship. However, correlation does not mean causation. There is a strong correlation between ice cream and crime, but ice cream does not cause increases in crime. Ice cream consumption rides the coat tails of hot weather. The energy market is too complex to rely on simple statistics. Talk to your ENGIE expert.