Neutron flux modal decomposition is a key tool for analytical and reduced order modeling of boiling water reactor (BWR) stability and oscillations. As a minimum, the fundamental flux mode is used for representing global oscillations while the addition of at least one azimuthal harmonic is needed for simulating the regional out-of-phase mode. Unlike the fundamental and first azimuthal modes, the excitation of an axial flux mode alters the axial power shape but not the total power in the channel and therefore cannot be self-sustained when coupled to density wave–generated reactivity, presumably explaining why it has not been explicitly included in previously published models. Although not self-sustained, the axial mode excitation driven by density wave propagation and interactions with other spatial modes play important roles in interpreting observed BWR stability and oscillations particularly in the nonlinear regime when the oscillation magnitude is large. In this paper, the characteristics of the steady-state axial modes are presented, and their impact on oscillation dynamics for small and large amplitudes of both the global and the regional oscillations is studied using reduced order analytical tools. Aside from the oscillating component, our research results identify an average nonzero axial mode component to develop during limit cycle oscillations that causes the average axial power profile to shift toward the bottom of the core and thus contributes a negative reactivity component. The emergence of this nonzero average axial mode component and the associated negative reactivity were found to diminish the power increase due to global mode power oscillations and contribute to nonlinear stabilization of regional oscillations. The physical interpretation of nonlinear power oscillations with the inclusion of the axial mode component resolves previously unexplained results obtained from high-fidelity numerical models.