Infinity Insights – Volume 10, Issue 1
AT-A-GLANCE SUMMARY
Spot NYMEX natural gas continued lower after breaking support at 2.17. A test of that level as resistance occurred, pushing prices higher on Friday.
SUMMARY OF THE LAST WEEK IN CHARTS
Spot month natural gas (February) has support at 2.17 then 2.04 with resistance at 2.36. Calendar year 2020 has support at 2.25 with resistance 2.34. Calendar year 2021 has support at 2.40 with resistance at 2.46.For a look at our monthly market reports, visit Infinity Power Partner’s Market Overview.
RoadmapNYMEX natural gas spot month (February) finished at $2.202, lower by $0.108 compared to the close of December 20th.
What’s This? – The “Roadmap” is the price action chart depicting the NYMEX natural gas spot month. It’s important because it is essentially the trading community’s market sentiment.
Calendar 2020Balance of Calendar 2020 ended the week ≈$0.02 lower at $2.30 compared to the 20th.
What’s This? – “Cal 2020” is the first complete 12-month strip. It gives you a visual of price action and provides a reference point for our take on the market.
Calendar 2021Calendar 2021 settled at $2.43 up by ≈$0.01.
What’s This? – “Cal 2021” is the second complete 12-month strip. It gives you a visual of price action and provides a reference point for our take on the market.
OUR TAKE ON THE MARKET
NYMEX Natural GasSpot NYMEX natural gas continued lower after breaking support at 2.17. A test of that level as resistance occurred, pushing prices higher on Friday. Weather remains the guiding force.
WHOLESALE POWER
ERCOTPrices have been defensive, due more to natural gas weakness than anything else. Weather remains the guiding force.PJMPJM has likewise followed natural gas. Weather?
ERCOT Real Time Pricing (LMP)
The spread between forward curve fixed pricing versus LMP is big. It’s so big that it deserves attention when deciding on structure.front of the forward curve is priced ≤$35/MW.the LMP market spiked much higher than normal similar to the events around the spike in 2011. Yes, there’s open ended risk with LMP (but it can be managed). The closest parallel to LMP pricing we’ve found is the NYMEX spot month price.We suspect that history will repeat itself in closing the gap of these price disparities. It will take time and will likely give warning of changes to come. The summer of 2020 will be the first test, and that’s a six month time frame. Are you suitable for this approach? Investigate.