Infinity Insights - Volume 11, Issue 11

AT-A-GLANCE SUMMARY
Spot NYMEX natural gas traded to $2.50 support during the week.

SUMMARY OF THE LAST WEEK IN CHARTS

Spot month natural gas (April) support is 2.35 then 2.00 with resistance at 2.75. Balance of calendar year 2021 finds support at 2.55 with resistance at 2.85. Calendar year 2022 has support at 2.55 with resistance at 2.80.

Roadmap

NYMEX natural gas spot month (April) settled $0.065 weaker at $2.535.

Balance of Cal 2021
Balance of Calendar 2021 closed off ≈$0.07 at $2.685.

Cal 2022
Calendar 2022 finished at $2.5925 ≈$0.04 off.

OUR TAKE ON THE MARKETS

NYMEX Natural Gas

Spot NYMEX natural gas traded to $2.50 support during the week. Next support is at $2.35, then $2.00. The calendar strips likewise weakened, indicating the bearishness is throughout the forward curve. Post-winter prices are often defensive as refilling storage begins. Buying weakness is a prudent procurement strategy.

WHOLESALE POWER

ERCOT

The aftermath of the St. Valentine’s Day freeze continues to confuse and perplex market participants. It has become a political football with the camps divided into (1) re-price the never before seen real time (LMP) pricing spikes along with ancillary pricing and (2) let pricing stand as the formulaically derived pricing was according to protocols and rules. There are winners and losers on both sides with end users bearing the brunt of bad results.

The magnitude and scope of pricing consequences is historic. No one we are aware of could see this coming and few were able to take corrective measures. It’s challenging but the industry is coping as best it can. One of the noticeable changes is higher heat rate values as load that was on LMP (at least to some extent) have switched to fixed price. This switch captures capacity with heat rate and higher values is the result.

 PJM

The coming of spring finds demand abating with prices tempered.

Stay Safe!