Infinity Insights-Volume 10, Issue 4

AT-A-GLANCE SUMMARYSpot month NYMEX natural gas (March) failed support Thursday after February expired.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (March) has support at 1.60 with resistance at 1.97 then 2.06. Balance of calendar year 2020 has support at 2.00 with resistance 2.14. Calendar year 2021 has support at 2.30 with resistance at 2.41.

RoadmapNYMEX natural gas spot month (March) ended lower by $0.29 at $1.841.Balance of Calendar 2020The balance of Calendar 2020 closed ≈$0.004 lower at $2.084.Calendar 2021Calendar 2021 went out at $2.3425, off ≈$0.015.

OUR TAKE ON THE MARKET

NYMEX Natural Gas

Spot month NYMEX natural gas (March) failed to support Thursday after February expired. Technical support is at $1.60. One would assume that weakness is good for the procurement of power but that’s not necessarily correct. The back of the curve (where you’ll likely be looking to lock) acts conversely and actually firms up with front weakness. With little prospect of sustained heating demand, the weakness will likely continue. Sideways action looks likely to converge the contangoed values lower as they approach spot.

WHOLESALE POWER

ERCOT

Looking at the prompt weakness in natural gas and the slow march of deferred values, one might expect lower power prices. Again, the back isn’t dramatically weaker and any advantage of lower gas price is offset by heat rates at or near their highs:

The offset results in fairly static prices. Value is offered.

PJM

Prices continue soft, reflecting the milder winter and low natural gas prices. Capacity is still a question mark but value is offered at current levels.