Infinity Insights-Volume 10, Issue 2

AT-A-GLANCE SUMMARY

Spot month NYMEX natural gas (February) traded between 2.26 and 2.10 over the last week before breaking to new lows Friday.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (February) has support at 1.99 then 1.89 with resistance at 2.09. Balance of calendar year 2020 has support at 2.15 with resistance 2.25. 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) ended the week lower by $0.199 at $2.003.

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 2020

Balance of Calendar 2020 closed ≈$0.115 lower at $2.185.

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 2021

Calendar 2021 settled at $2.4125 off ≈$0.0125

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 Gas

Spot month NYMEX natural gas (February) traded between 2.26 and 2.10 over the last week before breaking to new lows Friday. Open interest has increased, a sign of new positions (as opposed to liquidation). Indicators we follow are bearish. The dilemma a trader faces is deciding if this is a bottom or the start of the next leg down. Power procurers (our client base) are looking to lock in low prices for longer-term given the current curve.Procurement will most likely be in deferred strip values somewhere around 2.40 to 2.60, currently. There is a point where intrinsic value trumps other considerations. We believe today’s marks are offering value that’s attractive and available.

WHOLESALE POWER

ERCOT

As discussed above, power prices are low. They may go lower, particularly up front, due to weather. Conversely, a cold regime would likely rally the front. Regardless, the back of the curve is steadier and cheap relative to history. Value deserve consideration.

PJM

Prices of the forward curves of separate jurisdictions reflect weak feedstock (natural gas) without heat rates moving higher. The front (2021) has moved to new low ground. Weather changes will impact prices. Current prices offer value.