Infinity Insights-Volume 10, Issue 9
AT-A-GLANCE SUMMARYSpot NYMEX natural gas (April) traded between 1.60ish and 1.85ish over the past week.
SUMMARY OF THE LAST WEEK IN CHARTS
Spot month natural gas (April) has support at 1.60 with resistance at 1.85. Calendar year 2021 finds support at 2.25 with resistance at 2.32. Calendar year 2022 has support at 2.35 with resistance at 2.45.RoadmapNYMEX natural gas spot month (April) ended up by $0.024 at $1.708.Calendar 2021Calendar 2021 settled off by ≤$0.0025 at $2.2725.Calendar 2022Calendar 2022 ended the week at $2.3475, lower by ≈$0.02.
OUR TAKE ON THE MARKET
NYMEX Natural Gas
Spot NYMEX natural gas (April) traded between 1.60ish and 1.85ish over the past week. The 1.60 number comes from spot continuation chart support. Picking a bottom looks appetizing but the back of the curve has remained steady. Bottom picking is an expensive game best suited for deep-pocketed traders.
The coronavirus concern is bearish for energy if economic activity suffers. An exacerbation of this is panic, an emotional response. This adds to the volatility and uncertainty upfront. Front strength gives us expectations of weaker back marks, a good thing for power procurement.
WHOLESALE POWER
ERCOT
ERCOT is anticipating increased demand this summer. Capacity (built into ERCOT wholesale price) as part of heat rates would be expected to move higher. There’s no implicit expectation for feedstock (natural gas), but weather hiccups will likely be evidenced in both spot natural gas and real-time pricing (LMP). An opportunity for both trading upfront and energy procurement further down the curve.(
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PJM
PJM jurisdictions remain low-priced and, today, do not reflect any capacity concerns for this summer. Should stymied economic activity be a result of the coronavirus concerns, expectations would be for lower prices.