Infinity Insights-Volume 10, Issue 10

AT-A-GLANCE SUMMARY

The collapse of crude oil prices and the resilience of natural gas and power prices appears to us as the difference between global supply disruptions in an already over-supplied market and domestic demand requiring immediate and ongoing attention for supply.

SUMMARY OF THE LAST WEEK IN CHARTS 

Spot month natural gas (April) has support at 1.75 with resistance at 2.00. Calendar year 2021 finds support at 2.25 with resistance at 2.40.  Calendar year 2022 has support at 2.35 with resistance at 2.45.

RoadmapNYMEX natural gas spot month (April) finished higher by $0.161 at $1.861.Calendar 2021Calendar 2021 closed ≤$0.0825 higher at $2.355.Calendar 2022Calendar 2022 ended the week at $2.34, lowdown ≈$0.0075.

OUR TAKE ON THE MARKET

NYMEX Natural Gas

The collapse of crude oil prices and the resilience of natural gas and power prices appears to us as the difference between global supply disruptions in an already over-supplied market and domestic demand requiring immediate and ongoing attention for supply.

Spot NYMEX natural gas fell to last vestige of long term support and held. A key reversal occurred (lower lows, higher highs, higher close) Buying appeared to be short covering and likely some bottom picking. Open interest is flat to lower, something supporting the short-covering explanation. Indicators we follow have tempered and/or reversed previous bearish trend.

WHOLESALE POWER

ERCOT

What does all of this mean for energy procurement? Lights still have to be turned on and machinery needs to run. However, the amount of use will likely vary from industry to industry. Prices aren’t an obstacle but the amount of usage is and deserves expanded attention.(SEE: https://www.infinitypowerpartners.com/marketinformation/a-coronavirus-update/)(http://www.ercot.com/news/releases/show/203025) Power prices are static with natural gas steadying up and heat rates appearing toppy. There has been a trend to longer-term contracting, something we have advocated for suitable loads. The big issue today is the usage amount as discussed above. Combining ERCOT’s concern for adequate capacity this summer and economic downturn with coronavirus is new territory.

PJM

Wholesale prices are on their lows and weather is not challenging. Flat prices are our expectations.